Focus on Sustainability Priorities

This represents the first ESG pillar derived from the TECO B2B2S philosophy, focusing on the primary ESG topics within the company's own operations.

Risks of Force Majeure or Unforeseen Transition FailureRisk Management2024 Achievements Summary

Key Issues	Climate Action and Achieving Net-Zero Emissions Regulatory Compliance Waste Recycling and Regeneration Corporate Governance Occupational Safety Maintenance Pollution Control and Prevention Labor-Management Communication

Force majeure or unforeseen transformation failure risks	Failure to meet emissions reduction targets could damage brand reputation. Inaccurate supply chain emissions data increases compliance risks. Rapid regulatory changes and an insufficient response time could impact market entry. Misjudgment of policy direction could lead to transformation delays and penalties. Recycling designs that fail to meet regulatory or market standards will restrict product sales and market entry. Failure to adjust the governance structure in a timely manner may result in the loss of stakeholder trust and impact operational stability. Sudden disasters or inadequate protection could lead to industrial safety incidents and operational disruptions. Pollution incidents would trigger significant environmental and reputational risks, and result in regulatory penalties. Insufficient communication mechanisms during the transition period could trigger employee protests and talent

Hedging Management	Set the goal of "50% operational emission reduction in ten years," promoting energy saving, carbon reduction, and the introduction of renewable energy. Guide suppliers to conduct carbon emission inventories. Establish a compliance monitoring mechanism to regularly track policy changes. Review and adjust contract clauses and internal regulations in line with legal amendments; implement a 'rolling adjustment' mechanism based on industry needs. Improve material utilization rate and resource efficiency. Strengthen stakeholder engagement mechanisms and internal control systems Strengthen the adoption of green energy and energy-saving equipment to enhance energy efficiency and reduce pollutant emissions. Promote regular occupational safety and health training and audits, and establish cross-departmental reporting and quarterly inspection mechanisms to prevent workplace accidents. Develop competitive compensation packages and clear career development pathways. Build a comprehensive corporate information security governance framework to enhance the protection of sensitive data and ensure business continuity.

2024 Performance Summary	01. Renewable Energy and Carbon Management Performance In 2024, an additional 5.7 MW of solar capacity was installed at facilities in the U.S. and China, increasing total global capacity to 15.45 MW—equivalent to 15.73% of electricity consumption—and aligning with the 2030 target of reaching 30% As of the end of 2024, the company has accumulated 1,038 Renewable Energy Certificates (RECs) for self-generated green power, providing a quantified and transparent measure of renewable energy adoption. 02. Talent Equity and Organizational Resilience Enhanced digital capabilities through the TECO e-Academy, the M365 Digital Seed Program, and internal project competitions. In 2024, 44 key talents were developed, with 52.2% achieving internal promotion or career rotation. Strengthened female leadership through competency development, leadership pipeline programs, and talent succession planning. Female managers accounted for 22.8% in 2024, an increase of 0.9 percentage points from 2023. 03. Waste Reduction and Recycling Implemented waste reduction and recycling mechanisms, integrated with KPI management. Increased the use of eco-friendly coatings to 85%, reducing VOC emissions by 70% compared with 2015 levels. 04. Information Security Management Achieved ISO 27001 certification for the Information Security Management System. The General Manager also serves as Chief Information Security Officer (CISO), strengthening policy oversight and the promotion of information security initiatives. These initiatives have been incorporated into the annual KPI framework and linked to the performance evaluation system for senior executives to strengthen organizational sustainability implementation.

Prepared per GRI Standards, our materiality analysis integrates the EU’s double materiality principle, evaluating internal and external ESG impacts. A detailed table outlines 16 industry topics’ impacts and mitigation measures. In 2024, 215 questionnaires (Taiwan 71%, China 21%, Other regions 8%) identified 10 high-impact topics, presented in the “Material Topics Matrix Chart.” Key areas include “Regulatory Compliance,” “Corporate Governance,” and “Climate Action and Net-Zero Emissions.” Stakeholder feedback informs internal reporting.

Environment(E): Strengthen operations based on low-carbon and circular thinking

Climate Transition Risk Scenario Analysis

According to the scenario analysis published by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), if current trends continue, global temperatures are projected to rise by 1.5°C by 2030, 2°C by 2050, and 3°C by 2090. Under a 3°C temperature increase, physical impacts include a 10% reduction in labor availability due to heat. River flooding is expected to double in China and triple in India. Typhoon and cyclone frequency will increase by 16% in Japan, 12% in the Philippines, and up to 47% in the U.S. Economically, natural disasters could reduce global GDP by 2% by 2040, stalling economic development in many countries. Achieving net zero by 2050 would limit the temperature rise to 1.4°C, offering future generations an opportunity for change. The greatest transition risk arises from inadequate control of emission reduction pathways, potentially missing the last chance to avoid climate tipping points.

The NGFS NET ZERO 2050 scenario (1.4°C global warming by century-end) requires a fivefold increase in renewable energy, 50% electrification in residential and commercial sectors (including building material production), 40% use of net-zero fuels (e.g., hydrogen, biodiesel), 5 billion tons of carbon sequestration annually, improved energy efficiency, a 60% reduction in energy intensity, and decarbonization of agriculture, forestry, and land use (afforestation and oxygenation measures).

TECO’s Response Measures

・Within its industry, TECO develops high-efficiency motors, actively promotes green products, and provides complete power drive system solutions and services, helping customers achieve "safety, stability, improved efficiency, and carbon neutrality." TECO is also developing corrosion-resistant motors for carbon capture equipment, now included in the equipment supply chain.

・Urban electric bus power modules entered mass production in 2022, with a target of shipping 700 units in Taiwan by 2024.

・In 2024, TECO completed 5.7 MW of solar installations in the U.S. and China. Combined with existing capacity, the global solar installation reached 15.73 MW. Further expansion in 2025 aims for 2030 renewable energy generation to cover 30% of total electricity consumption.

NGFS NDCs Scenario (2.6°C global warming by century-end)

To prevent carbon leakage, the EU’s Carbon Border Adjustment Mechanism (CBAM) requires importers to report emissions for products such as cement, steel, aluminum, fertilizer, electricity, and hydrogen. From 2026, CBAM certificates will impose carbon tariffs on imports that did not pay carbon costs in the country of production. The U.S. Clean Competition Act (CCA) proposes charges on high-carbon imported raw materials (steel, aluminum, cement), though details and timelines remain undecided. In Taiwan, under the Climate Change Response Act, specific imported products are required to report emissions and obtain carbon credits or pay fees.

Emission Reduction Strategy

Announced the "50% Emission Reduction in 10 Years" Goal

TECO has been recognized five times by international sustainability organizations, including the Dow Jones Sustainability Index (DJSI) and the S&P Global Sustainability Yearbook, achieving outstanding performance among peers in emerging markets. In 2021, TECO announced a project goal to reduce operational carbon emissions by 50% over ten years, aligning the entire group to work toward carbon reduction. At the same time, the company has fully implemented "Sustainability KPIs," embedding sustainability management into TECO's corporate culture, with the ultimate target of achieving "net zero emissions" across the group by 2050.

At TECO, the "ESG Promotion Office" plays a key role in coordinating the management of climate-related risks and opportunities. It places high importance on continuous communication and feedback with internal and external key stakeholders, and works with relevant departments to develop specific and actionable response strategies. Through a collaborative review mechanism, TECO ensures that sustainability commitments are translated into concrete annual action plans and, guided by clear ESG themes, fully implements the B2B2S sustainability management philosophy.

TECO Global Value Chain and Greenhouse Gas Inventory

Internal Carbon Pricing (ICP) System

To advance low-carbon development and accelerate the Group’s carbon reduction performance, TECO implemented the Internal Carbon Pricing (ICP) system in 2023, following board approval, as an incentive mechanism for internal performance management. ICP is guided by the “polluter pays” principle, with the Group uniformly charging business units for carbon emissions. By setting carbon fees, each production site self-regulates emissions, improves energy efficiency, promotes lower-carbon production processes, identifies and captures low-carbon opportunities, and develops innovative technologies. The ICP aims to motivate all employees to consider carbon emissions related to their work as a critical priority. Currently, TECO’s internal carbon price is set at NT$1,600 per ton of CO2e. General Managers of the three major business groups are assigned annual emission targets and budgets to pay the internal carbon fee. Exceeding the target results in higher payments, directly impacting business group performance and bonuses.

To enhance overall carbon management effectiveness and encourage innovation, and to achieve short- and medium-term emission reduction targets as well as net zero by 2050, in 2024 TECO further established the "ICP and Carbon Fee Payment & Management Procedures." The General Manager serves as the convener of the "ICP and Carbon Fee Management Team." Besides reviewing the internal carbon price annually, the procedure optimizes the use of the accumulated carbon fund as a financia

Energy Management Plan

TECO Energy Management Plan	2024 Management Actions
Conduct energy audits to identify opportunities for efficiency improvement	In accordance with the ISO 14001 Environmental Management System and internal procedures, TECO conducts annual energy audits to analyze the types and usage of energy at each operational site, identify major energy hotspots, and develop effective energy-saving and carbon-reduction plans.
Quantitative energy-saving targets	Based on energy usage across TECO’s global production sites (coverage 84.34%), energy sources include natural gas, diesel, gasoline (Scope 1), and purchased electricity (Scope 2). Scope 2 energy consumption targets a 5% annual reduction, while Scope 1 targets aim for 30% of operational electricity consumption to come from renewable energy by 2030.
Actions to reduce energy consumption	In 2024, 27 energy-saving and carbon-reduction projects were implemented, saving 591,654 kWh of electricity (using Taiwan 2023 electricity emission factor of 0.494 kg CO₂e/kWh), equivalent to approximately 290 tons of CO₂e reduction. Since 2021, electricity management guidelines have been introduced, reducing 39,306 MWh compared with 2021, promoting energy-saving variable frequency equipment, adding shading devices, increasing illumination, and improving long-term energy use. The Group also plans to establish energy-intensive facilities and promote facility upgrades.
Progress in reducing energy consumption	In 2024, the above energy-saving and carbon-reduction projects saved a total of 591,654 kWh, reducing emissions by 29 tons of CO₂e (calculated using Taiwan 2023 electricity emission factor).
Use of renewable or alternative energy	In 2024, TECO activated 6.7 MW of solar power in the U.S. and China. Combined with existing capacity, global solar installation reached 15.45 MW. In 2025, the Group plans to expand electricity purchase agreements, targeting 30% renewable energy use across global production sites by 2030.
Invest in or procure equipment to reduce energy consumption	In addition to energy-saving and carbon-reduction projects, high-energy-consuming equipment is being replaced and efficiency improved, including equipment type optimization, reducing the need for cooling fans, increasing efficiency, and extending equipment lifespan.
Employee training on energy efficiency to raise awareness	TECO promotes energy-saving training at all production sites, covering case studies, air-conditioning energy-saving, and equipment maintenance. In 2024, 730 participants received training, accumulating 1,000 hours (2,000 course hours in total).

Biodiversity and Ecosystem Restoration

According to the World Economic Forum’s Global Risks Report published in January 2025, biodiversity loss, climate change, and natural resource scarcity are ranked among the critical risks for business operations. TECO recognizes its own and its value chain’s dependence on and impact on natural capital. Therefore, referencing the Taskforce on Nature-related Financial Disclosures (TNFD) framework, combined with the ISO 14001 Environmental Management System and existing corporate risk management mechanisms, TECO systematically identifies and manages the dependencies, impacts, and sensitivities of the value chain (upstream, own operations, and downstream), assesses major nature-related risks and opportunities, and integrates biodiversity protection and ecosystem restoration into its sustainability strategy. This approach aims to build environmental resilience and strengthen operational robustness to meet global ecological and climate challenges.

Natural Capital Dependency & Risk Management Process

Value Chain Natural Dependency, Impact & Sensitivity Identification	Define the scope and boundaries of natural capital issues within the company. Establish TECO's principles on natural dependency, impact, and sensitivity using data sources such as Encore and IBAT. Analyze the key dependencies on ecosystem services, natural impacts, and sensitive positions.
Risk and Opportunity Identification & Analysis	Review international reports and industry surveys to compile key value chain risks (upstream, own operations, downstream). Identify key risks and opportunities based on risk and opportunity identification principles. Develop management strategies.
Measurement Indicators & Target Setting	Establish corresponding management indicators and target-setting measures. Implement medium- and long-term promotion plans.
Monitoring, Communication & Disclosure	Report using frameworks such as TNFD. Regularly report results and progress of relevant topics to senior management and the board.

Society(S): Empower employees and enhance their well-being

Human Rights Policy Statement

TECO respects and supports the labor standards set forth in the United Nations Universal Declaration of Human Rights, the United Nations Global Compact, and the International Labour Organization Conventions, and is committed to ensuring that every individual within TECO, its stakeholders, supply chain, and partners—including but not limited to regular employees, contract employees, suppliers, contractors, new business relations (mergers, acquisitions, joint ventures), customers, and local communities—is treated equally and with dignity. Our Human Rights Policy Statement is as follows:

01. Investment

Conduct human rights assessments and include human rights clauses in major investment agreements.

02. Fairness and Non-Discrimination

Any form of sexual harassment and discrimination in the workplace is strictly prohibited. Employment, evaluation, and promotion decisions shall not be based on race, skin color, nationality, gender, age, marital or family status, disability or pregnancy, political stance, or religious belief, ensuring equal opportunities for all.

03. Fostering Good Labor-Management Relations

Provide diverse and open communication channels to promote harmony between labor and management, and foster a positive labor-management relationship.

04. Prohibition of Child Labor

Employment standards shall comply with local regulations regarding minimum age requirements.

05. Prohibition of Forced and Compulsory Labor

Respect employees’ willingness and prohibit any form of forced or compulsory labor.

06. Working Hours

Working hours are in accordance with local statutory requirements, with daily and weekly maximum limits set according to relevant laws. The company also implements overtime monitoring and provides paid annual leave and statutory holidays to protect employees’ physical and mental health and prevent excessive work hours.

07. Fair Compensation and Living Wage Assurance

Provide employees with a basic wage and benefits that comply with local regulations and strive to pay a living wage to ensure employees and their families’ basic needs are met. We also commit to the principle of equal pay for equal work, ensuring gender pay equality. The company regularly reviews the compensation structure to maintain fair, dignified, and inclusive treatment.

08. Safe and Healthy Work Environment

Provide a safe and healthy working environment, comply with applicable safety and health regulations, and implement preventive measures to minimize work-related injuries. Further, we strive to create a healthy, safe, and mutually respectful work environment and help employees maintain physical and mental well-being and work-life balance.

09. Education and Training

Ensure that employees and security personnel regularly receive training on operational human rights policies.

10. Suppliers

Conduct human rights assessments for new suppliers as part of the selection criteria and strive to eliminate human trafficking and forced labor in the supply chain, including temporary workers, while respecting the rights of all migrant workers and their family members.

11. Open Communication Channels for Employee Rights

To ensure full communication and effective resolution of human rights issues, the company has established grievance channels that allow employees, suppliers, partners, and other stakeholders to provide feedback or report suspected violations to TECO.

12. Handling Major Violations

If any employee violates human rights, the code of conduct, or integrity principles, and an investigation confirms the violation, appropriate disciplinary actions shall be taken based on severity, such as warning, demerit, major demerit, or termination of employment. The disciplinary actions shall be followed up and monitored to prevent recurrence. For partners who violate human rights, the code of conduct, or integrity principles, if they fail to improve after guidance or the violation is severe, business relations may be immediately terminated.

Talent Development Programs

Development Plan

Digital Seedling Cultivation and Digital Competition:

In response to the rapid development of digital transformation, the company officially introduced the M365 collaboration platform in 2023. In 2024, we not only provided universal training on basic tools for all employees but also selected "digital seedlings" from various business units. This initiative focuses on cultivating their ability to leverage M365 tools to drive process automation and visualization. Through a digital competition, we ensured the practical application and implementation of M365, further enhancing the company's overall digitalization efficiency.

Benefit Description

Through the digital seedling cultivation program and competition, the company has not only strengthened the team's ability to use digital tools to solve problems but also actively driven process optimization and improved collaboration efficiency. The accumulation of these application cases has made us more effective in real-time data mastery, process simplification, and cross-departmental integration, gradually implementing the company's strategic direction of "digital-driven operations" and further enhancing overall operational performance and market responsiveness.

Quantifiable Benefits

In 2024, a total of 58 digital seedlings were cultivated. The digital competition received 40 team proposals, 11 of which were recognized by the judges and achieved excellent results. The combined benefits brought by all proposals are expected to save approximately 4 million in costs and expenses.

Participation Rate

2.58% (58/2244)

Development Plan

Key Talent Cultivation Program:

To proactively cultivate successors for management roles, the company has established a "Key Talent" system for employees at job grades 5-8. Key talents from various units are selected every two years, and an Individual Development Plan (IDP) is created for each participant. By utilizing IDPs and investing training resources into these key talents, we are building a succession pipeline for the company's junior and middle management levels.

Benefit Description

Cultivating key talents ensures the continuity and stability of operations across units, reducing disruptions caused by management changes.
Successors are familiar with the company's strategy, enabling more effective promotion and implementation of goals when they assume new roles, and better responses to market changes and challenges.
A clear key talent system effectively motivates employees by showing clear career development paths, fostering a stronger sense of identity and belonging to the company, which helps improve team productivity.

Quantifiable Benefits

Among the 44 key talents in 2024, 23 colleagues received job grade promotions during the program period (including 2 promotions to job grade 9, and 5 colleagues who were not previously in management roles promoted to management positions), resulting in a promotion rate of 52.2%.

Participation Rate

1.96% (44/2244)

Development Plan

Mentor Program:

To strengthen the succession and organizational capabilities of middle and senior management, high-level executives are arranged to serve as mentors for potential successors. Based on 360-degree management competency assessments and individual needs, mentors share their experiences and management philosophies, providing guidance and assistance to accelerate the Mentees' holistic growth. Additionally, a select group of potential successors from middle management forms a small team mentored directly by the General Manager.

Benefit Description

Through the General Manager's guidance, team members develop high-level executive thinking. The exchange among Mentees from different business groups encourages collaborative exploration of development directions, proactive planning and execution of cross-unit projects, and active seeking of external resources to build diverse connections and expand horizontal perspectives. This process provides members with increased inspiration and growth opportunities, with several members receiving promotions or expatriate assignments, fully demonstrating the substantial benefits of the program.
Through this platform, team members collaborate across business groups to integrate TECO's products in engineering, motors, and HVAC&R (heating, ventilation, air conditioning, and refrigeration) fields, driving integrated Data Center projects with markets covering Taiwan, Southeast Asia, and North America. This project is estimated to generate synergistic benefits of over NT$10 billion annually.

Quantifiable Benefits

In 2024, among 18 middle and senior potential talents, 3 colleagues received job grade promotions and 2 colleagues obtained expatriate opportunities.

Participation Rate

0.8% (18/2244)

Performance Measurement and Long-Term Incentives

Performance Measurement

Management by Objectives (MBO): TECO Group actively implements performance reviews. The company has established "Employee Performance Management Regulations" and "Review Regulations," mandating two performance appraisals annually (semi-annually). Appraisals are conducted by the immediate supervisor and the second-level supervisor (for project support or matrix organization dotted-line reporting, the project/dotted-line supervisor participates in the review). The appraisal grades are divided into 5 levels (Level 1 being the best), with the proportional distribution of each level handled according to the annual review notification. The review content includes: Key Objective Achievement (70%); Competencies (Innovation/Communication/Adaptability) (15%); and Attitude (Achievement Motivation/Proactivity/Responsibility/Customer Orientation/Teamwork) (15%). Before the appraisal, supervisors arrange at least one performance interview focused on understanding employee performance, providing feedback, and confirming goals and development plans. Employees with unsatisfactory appraisals undergo a performance coaching program led by their unit supervisor; in 2024, a total of 229 employees in the Group received coaching for improvement.
Multi-faceted Performance Appraisal: To refine the employee performance appraisal system and accommodate differences in job attributes, multi-angle feedback is obtained for senior executives, employees promoted to manager level or above within the current year, personnel in certain matrix management organizations, and expatriates. Appraisal dimensions include performance, responsibility, leadership, continuous improvement, and organization.
Team Performance Review: The Chairman, General Manager, and relevant senior executives conduct a quarterly review and appraisal of the goal attainment status for each business group and staff department.
Agile Dialogue: Starting from the 2024 performance appraisal cycle, a performance interview questionnaire process was added to ask appraisees whether they had a performance interview with their immediate supervisor. After the appraisal process concludes, the performance interview completion rate for all business unit supervisors is statistically tracked (target is 90% or above) and linked to the business unit's KPI score (a penalty of 0.5 points is applied if the target is not met) to urge unit supervisors to maintain closer communication and dialogue with their subordinates. The execution rate for interviews between immediate supervisors and subordinates reached 75.9%.

Long-Term Incentive Program

TECO established a "Long Term Incentive (LTI) System" in 2023 applicable to employees at the manager level and above. LTI bonuses are granted annually and unlocked/issued over the next three years based on individual KPIs and performance reviews. TECO's performance appraisal KPIs are set based on the nature of the projects being executed; for personnel involved in sustainability projects, their KPIs are linked to relevant sustainability indicators.
TECO Electric & Machinery established the Employee Stock Ownership Plans (ESOP) to continuously optimize long-term incentive methods and increase the proportion of employees whose indicators include sustainability metrics in their assessments. All employees who meet the requirements for performance review results and seniority can participate in the stock ownership plan, applicable to 71.8% of employees (1,611 people / 2,244 people), with 275 individuals participating in the plan, holding 2,684,769 shares.

Weighting of Sustainability Performance in KPIs

Applicable Personnel	Weighting of Sustainability Performance in KPIs	Indicator Content
General Manager and Business Group GMs	2%	Total carbon emission reduction attainment, carbon intensity improvement, green supply chain advancement
GMs of Key Manufacturing Subsidiaries	4%	Total carbon emission reduction and intensity improvement, effectiveness of key carbon reduction projects, status of green supply chain achievement
GMs of Sales Subsidiaries	4%	Carbon intensity improvement, growth in low-carbon product sales ratio
Middle/Senior Managers and Sustainability Project Personnel	Individually set	ESG project progress and performance indicators, differentiated KPIs designed according to departmental responsibilities.

Labor Union and Labor-Management Conferences

To enhance work efficiency and improve labor conditions, and to promote smooth communication and coordination between labor and management, the TECO Company Industrial Union was established in July 1974. To safeguard the rights of both labor and management and foster a harmonious and unified relationship, TECO and representatives of the Industrial Union signed a collective bargaining agreement starting December 28, 1981. The process was re-initiated in 2018 and spanned 4 years, involving a total of 13 negotiation meetings. During this period, both parties upheld the spirit of labor-management autonomy and the principle of good faith to negotiate matters related to employee labor conditions, welfare measures, occupational safety, internal grievance systems, union operations, and the use of company facilities.

Both parties successfully signed an updated collective bargaining agreement on February 21, 2023. This agreement stipulates several terms that are superior to current labor laws. The revised collective bargaining agreement is effective for a period of 3 years, from the signing date until February 20, 2026. All union members are protected by this agreement.

The union holds an annual general assembly for members each year, and union directors and supervisors are re-elected every four years. A biannual symposium is held between the Chairman, General Manager, and the union's directors and supervisors. Member representatives are elected by member vote, and 11 union directors and 3 supervisors are elected. Monthly union director and supervisor meetings are held to discuss various issues relevant to employees, and the company attends these meetings for communication.

A union office is currently established within the factory premises, allowing employees to communicate and exchange opinions with union representatives at any time. The company also holds biannual symposiums where union directors and supervisors can communicate directly with the General Manager. Furthermore, an annual selection and commendation event for outstanding laborers is organized, selecting one individual per 100 employees. All company operational activities and significant changes to employee work procedures adhere to the requirements of the Labor Standards Act.

Data disclosure scope: Taiwan parent company, accounting for 42.7%. Among these, there are 1,983 employees eligible to join the labor union, and 1,983 employees participating in the union (100%).

TECO has also established various grievance channels, such as regularly held quarterly labor-management consultation meetings, and ad-hoc meetings can also be convened as important avenues for employee communication regarding rights and interests, ensuring regularized labor-management interaction. Discussion items at labor-management consultation meetings include personnel changes, company business development and talent development needs, salary and benefits, working environment, and grievance matters. Employees can safeguard their rights through the company system or by providing feedback to labor-management representatives to ensure protection of rights and maintain positive interactions between both parties.

TECO Group has labor union organizations in Taiwan, Wuxi (China), Mexico, and Vietnam, accounting for 60.7% of the entire Group’s core business operations.

Occupational Safety and Health Maintenance

Under the General Manager’s Office, TECO has established a dedicated Safety & Health Team responsible for formulating company-wide and plant-specific environmental, safety, and health policies, managing related plans, and overseeing implementation across the entire group. Each plant also has a dedicated Safety & Environment unit to ensure the effective operation of the Environmental, Safety, and Health (ESH) management system.

TECO has established an Environmental and Occupational Safety & Health Management System based on ISO 14001 and ISO 45001 standards, promoting the operation of a systematic management model.

TECO has a total of 15 production sites, all of which have obtained ISO 14001 Environmental Management System certification, demonstrating the company’s commitment to sustainable environmental governance. Among them, 10 sites have obtained ISO 45001 Occupational Safety and Health Management System certification. The remaining 5 sites (Jiangxi TECO, Jiangxi Dongcheng, Wuxi Micro-Motor, Shinchang Electric, and Westinghouse USA) have not yet completed this certification but implement autonomous management and internal audits according to the group-wide ESH management policies and internal control mechanisms, continuously monitoring environmental and occupational safety risks to ensure operational safety and compliance. Furthermore, three sites—including Zhongli Plant, Hukou Plant, and Dongsheng Company—have also obtained CNS 45001 (formerly TOSHMS) national occupational safety and health management system certification, further strengthening compliance with local regulations and standards.

Major Occupational Safety Accident Handling Procedures

Immediate Reporting and On-Site Response	Activate the emergency response mechanism and notify senior management and regulatory authorities. Secure the incident site, prioritizing personnel rescue and medical assistance, while initiating contractor communication protocols.
Preliminary Investigation and Stakeholder Communication	Establish an internal emergency response team to document the event and conduct preliminary cause assessment. Set up internal communication channels to facilitate both internal and external dialogue, including psychological support.
Root Cause Analysis and Third-Party Audit	Engage third-party organizations, if necessary, to investigate and issue reports clarifying potential causes. Develop corrective action plans based on findings and review procedures with regulatory authorities.
Incident Prevention and System Enhancement	Implement risk control measures across similar operational areas and strengthen pre-operation inspections. Review and revise operational procedures, coupled with enhanced training and awareness programs.
Remediation Measures and Compensation Mechanisms	Provide Employee Assistance Programs (EAPs) for care and follow-up. Coordinate with relevant company departments to ensure proper compensation measures are addressed.
Performance Tracking and Continuous Disclosure	Monitor the implementation of operational procedures and completion rates of training programs. Disclose incidents and corrective actions transparently.

DEI Activities

In 2024, a DEI training course titled "Mastering Gender Perspective for a Respectful and Inclusive Workplace Environment" was launched. Employees can access this course online via the "TECO e-Academy" platform, achieving a completion rate of 64.8% for all employees and 63.98% for management roles.

Since 2022, the company has actively promoted gender equality and a DEI culture. Through systematic planning, we aim to foster a sense of identity and enhance participation in DEI among TECO employees internally, while externally positioning TECO as a company that respects differences and values talent diversity to potential applicants.
Our promotion efforts were recognized in 2024 when we received several honors: the "Diversity and Inclusion Vision Award - Gold" from Womany, the "Taipei City Gender Equality Certification - Silver Award," and the "DEI Friendly Senior Employer Award."

Award Benefits

Externally expanding employer brand image to attract diverse and cross-generational new talent
Internally cultivating sustainable talent and promoting team effectiveness
News media/social exposure (official website, FB, IG, LinkedIn)
Exclusive case study article coverage written by Womany
Physical trophies/medals/certificates

Human Rights and Policies

Human Rights Related Education and Training:

In 2024, human rights related education and training included 55 courses totaling 162 hours, such as "Mastering Gender Perspective for a Respectful and Inclusive Workplace Environment," "Personal Data Protection and Information Security," "Occupational Safety and Health Education and Training," and "Civil Defense Group Fire Drill."

Human Rights Related Agreements and Contracts:

TECO safeguards employee human rights through labor unions and labor-management conference systems; 100% of employees eligible to join the union are protected by the union. For suppliers, TECO enforces a "Human Rights and Environmental Sustainability Commitment Letter" as a binding constraint.

Governance(G): Advance sustainability governance and information transparency

Sustainable Governance

Nomination and Selection Processes of the Highest Governance Bodies and Their Committees

The Board of Directors serves as the highest governance body, responsible for appointing senior management and establishing corporate social responsibility, corporate citizenship, and sustainability strategies. In accordance with the Corporate Governance Best Practice Principles, board appointments prioritize gender equality and diverse professional backgrounds. Members are expected to possess core competencies such as operational judgment, financial analysis, management expertise, crisis response, industry insight, and international perspectives to achieve effective governance.

According to the company’s Articles of Association, the Board comprises 11 directors with a three-year term, including four independent directors. Director appointments follow a candidate nomination system, with nomination, review, and disclosure procedures conducted in accordance with the Company Act and related regulations. Current board members primarily come from academia and industry, with expertise in areas such as industry knowledge, finance, and legal compliance, demonstrating the professionalism and diversity of the governance structure. To strengthen corporate governance and sustainability management, the Board has established five functional committees:

Audit Committee: Composed entirely of independent directors, with one independent director appointed as convener and chair.
Remuneration Committee: Comprising at least three members, with a majority being independent directors. Members elect the convener and chair among themselves.
Corporate Governance and Sustainability Committee: Consists of three or more directors and is responsible for sustainability strategy planning and oversight of governance effectiveness.
Nomination Committee: Composed of at least three directors, with a majority being independent directors. The convener is elected by members; in the current term, the Chairman, Li Mingxian, serves as convener.
Strategy Committee: Comprised of at least three directors or external experts, with the Chairman serving as convener and meeting chair, assisting in formulating long-term development strategies.

The 2025 Sustainability Development management policies, strategies, and objectives, as well as the implementation status, were reported to the Corporate Governance and Sustainability Committee on January 22, 2025, and August 6, 2025, and subsequently reported to the Board of Directors on February 19, 2025, and August 13, 2025.

Executive Compensation Metrics

Executive performance is evaluated quarterly based on KPIs. Key performance indicators include Value-Added Management, Accelerated Operations, In-Depth Management, and Forward-Looking Planning. Approximately 60% of the evaluation metrics are linked to financial indicators (e.g., revenue, operating profit, net income, total asset turnover, return on assets, return on invested capital, etc.), while 40% are tied to short-, medium-, and long-term planning, execution, and sustainability KPIs. Sustainability KPIs cover three main indicators: carbon emissions, carbon intensity, and green supply chain robustness (assessed through greenhouse gas inventories). KPI achievement rates are directly linked to variable bonuses. Additionally, starting in 2023, an internal carbon pricing mechanism (NT$1,600 per ton) has been implemented, with carbon fees applied, impacting business unit profitability and, consequently, executive compensation.

Long-Term Incentive Mechanism

The company established the "TECO Motor Cohesive Shareholding Committee," allowing managerial-level employees to contribute a portion of their monthly salary, with the company matching contributions to purchase company shares via a trust. TECO continues to optimize long-term incentive programs and increase the proportion of employees evaluated on sustainability indicators. This mechanism strengthens the alignment between executive rewards and medium- to long-term company performance, enhancing employee engagement, loyalty, and shared ownership of company achievements.

Sustainability Information Management Procedures

To implement sustainable governance and ensure the quality and reliability of sustainability information, TECO has established the "Sustainability Information Management Procedures." This serves as the standard operating process for collecting, consolidating, verifying, and disclosing sustainability information internally. It aims to enhance cross-department collaboration and improve the accuracy, consistency, and completeness of information. Through this procedure, TECO minimizes the risk of misstatements in public disclosures while ensuring compliance with applicable regulations, transparently and reliably addressing stakeholder expectations regarding sustainability performance.

IFRS S1 and S2 Disclosure Preparation

TECO has initiated preparations for sustainability information disclosure in compliance with international standards. The Finance Department serves as the primary responsible unit, with the ESG Office acting as co-executive secretary, collaborating with key business and support units to prepare and inventory information in accordance with IFRS S1 “General Requirements for Disclosure of Sustainability-related Financial Information” and IFRS S2 “Climate-related Disclosures.” To enhance completeness and compliance, external consultants have been engaged for preliminary assessment and guidance, ensuring disclosure mechanisms align with global sustainability reporting trends and providing a solid foundation for future sustainability performance management and transparent reporting.

Role of the ESG Office

The ESG Office reports directly to the Chairman and is responsible for driving sustainability initiatives:

・Consolidate international trends and industry characteristics to develop group sustainability strategies and implement net-zero emission goals.

・Foster a sustainability culture and strengthen sustainability empowerment.

・Plan and execute sustainability projects, monitoring progress to enhance competitiveness.

・Assess responses to key international initiatives and actively engage with stakeholders.

・Disclose TECO’s sustainability performance and aim for strong results in domestic and international ESG ratings and benchmarks.

Business Ethics and Governance of Group Subsidiaries

To ensure that all employees conduct business activities in strict compliance with ethical standards and codes of conduct, TECO has established the "Code of Ethical Conduct for Directors and Executives" based on the "Reference Example for Ethical Conduct Guidelines of Listed Companies." This serves as the behavioral standard for all personnel, from board members to frontline employees. In terms of sustainable governance, the Board has issued three foundational documents: the "Sustainable Development Practice Guidelines," the "Code of Integrity in Business Operations," and the "Corporate Governance Best Practice Principles" to define operational standards. Additionally, the "TECO Group Sustainability Management Policy and Commitments" has been published to foster a strong corporate culture and guide sustainable practices.

TECO has issued the "TECO Sustainability Management Commitment Letter" requiring all employees to comply. For supplier management, we follow the "Supplier Code of Conduct" and require suppliers to sign back a "Human Rights and Environmental Sustainability Commitment Letter" concurrently when signing procurement contracts. For listed companies within the consolidated annual report scope and all manufacturing subsidiaries with controlling power, the "TECO Group Sustainable Management Policy and Commitment" serves as a guiding principle, regulating business direction in environmental, social, and governance (ESG) domains to ensure the implementation of the Group's overall sustainable development policy and satisfy the requirements and expectations of stakeholders.

Information Security Management

TECO has established an Information Security Management System (ISMS), integrating international cybersecurity standards such as IEC 62443 and NIST SP 800-82 into our security rating services. We conduct continuous security assessments to strengthen our defense capabilities. In 2024, we successfully completed the transition audit for ISO 27001:2022 certification.

Information Security Governance

TECO established an Information Security Committee under the Board's "Corporate Governance and Sustainability Committee" and appointed a Chief Information Security Officer (CISO).

On September 1, 2024, the "Information Security Office" was established as a dedicated information security management unit, continuously supervising efforts to strengthen security measures.

Board Director: Ms. Sophia Chiu, manages the TECO Group’s digital transformation and information security strategies. The company obtained ISO/IEC 27001 and CNS 27001:2014 Information Security Management System (ISMS) certification on November 4, 2021.
Board Director: Mr. Rong-Jin Shen, current Senior Advisor to the President. While serving as Vice Premier and CISO of the Executive Yuan, he prioritized information security as a national security issue, supervised government responses to cyberattacks from Mainland China, and supported the industrialization of Taiwan's information security sector, establishing a complete cybersecurity industry ecosystem.
Independent Director: Ms. May-Chun Chao, served as an Information Task Force committee member responsible for planning information system reconstruction during her tenure as a managing director of the Taipei Bar Association.
Chief Information Security Officer (CISO): Mr. Kevin Kao, General Manager, also serves as the Chairman of the Information Security Committee, responsible for planning the Group's information security systems and monitoring information security management operations.

Information Security Defense

TECO views information security as a core element of sound corporate governance and the protection of stakeholder interests. We systematically manage risks through our "Information Security Policy" and international standards to ensure the confidentiality, integrity, and availability of information, thereby protecting the data security and trust of customers, employees, and partners. This approach, supplemented by annual education and training, is our concrete practice for strengthening cyber resilience, ensuring business continuity, and fulfilling corporate social responsibility, aiming to achieve sustainable operational goals.

Information Security Audit

The company conducts annual internal audits in accordance with the ISO/IEC 27701 Privacy Information Management System (PIMS) standard. Through a systematic review mechanism, we ensure the effective operation of information security and personal data protection measures, and continuously strengthen privacy governance and compliance management capabilities.

Process Architecture

TECO performs business continuity verification drills at least every six months. In 2024, drills were conducted for the ERP system, global order system, and backbone firewall systems. We also completed the construction of a log management system and introduced NDR (Network Detection and Response) for automated monitoring and analysis of abnormal network traffic behavior, rapid threat detection, effective response to cyberattacks, and overall security enhancement. Having successfully completed the ISO 27001:2022 transition audit in 2024, we maintain continuous ISO 27001 certification and are evaluating other certifications (e.g., ISO 27701) in the future. TECO Electric & Machinery has formulated a "Personal Data File Security Maintenance Plan and Processing Method" to promote and implement personal data protection.

Risk Control

To ensure the stable and secure operation of information systems and enhance defense-in-depth, we focus on three major objectives: anti-virus, anti-hacking, and anti-data leakage. We reinforce network firewalls, antivirus measures, and network whitelist control. Through intrusion detection systems, malicious traffic is identified and proactively blocked from entering the network. This improves the company's ability to defend against external attacks and secure internal confidential information, ensuring that the company's information assets are protected from various threats and damages that could cause errors or service interruptions.

Stakeholder Engagement and Material Topics

Stakeholder Identification and Communication

Stakeholder identification is conducted by the ESG Office. The identification method, referencing the AA1000 Stakeholder Engagement Standard, categorizes the stakeholder list into seven groups: shareholders, employees, customers, suppliers, local communities, civil organizations and NGOs, and the government. TECO conducts a double materiality analysis, considering both financial and ESG aspects of each topic. This approach aims to balance financial indicators in guiding the sustainable actions of our business units towards external stakeholders.

Stakeholder: Shareholders

How Identified	Those who hold publicly issued stock
Purpose of Engagement	Maintaining investor confidence
Communication Channels / Response Methods / Frequency	● Market Observation Post System (MOPS) ● Shareholders' Meetings: Convened at least once a year ● Host four online investor conferences annually ● Occasional participation in domestic and international investment forums ● Ad-hoc reception of visiting institutional investors or meetings with brokerage firms ● Investor Relations / Shareholder Services Dedicated Phone Line and Email: Prompt responses by assigned personnel ● Contact Person: (IR) Director Chien (ir@teco.com.tw)
Communication Effectiveness / Outcomes	● Included as a constituent stock of the "Dow Jones Sustainability Index" and the "FTSE4Good TIP Taiwan ESG Index." ● Monthly revenue, quarterly financial reports, and various operational information are publicly announced on the Market Observation Post System (MOPS) and the company website. ● In 2024, four online investor conferences were hosted, with Chinese and English video links uploaded to the Market Observation Post System (MOPS) and the company website. ● Participated in 8 domestic and international investment forums by invitation. ● Received 96 visits from investors (excluding investment forums and brokerage analysts), including 26 foreign institutional investors; held 21 proactive visits to brokerage firms.
Reported To	Reported to the Board of Directors by the Corporate Governance Center

Stakeholder: Employees

How Identified	Internal regular employees or contract staff
Purpose of Engagement	Fostering labor-management harmony
Communication Channels / Response Methods / Frequency	● Labor-management meetings: Quarterly ● Union roundtables: Semi-annually ● Catering Committee Meetings: Quarterly ● Employee Quarterly Meetings: Quarterly ● Occupational Safety and Health Committee: Quarterly ● Employee satisfaction survey: Annually ● Electronic Bulletin Board: Ad-hoc Announcements ● Workplace Misconduct/Harassment & Grievances: HRP@teco.com.tw ● Contact Person: (HR) Director Lin (cplin@teco.com.tw)
Communication Effectiveness / Outcomes	● Labor-Management Meetings: 22 meetings held across Nangang and various plant locations in 2024. ● Union Roundtables: Two semi-annual meetings were conducted, involving the Chairman, President, plant managers, Human Resources Center director, supervisor, and union directors and supervisors. ● Catering Committee Meetings: 13 meetings held across Nangang and various plant locations in 2024. ● Employee Quarterly Meetings: A total of 8 meetings were held across Nangang and various plant locations in 2024. Four of these meetings in Nangang were conducted online via remote communication software, enabling virtual attendance for employees from all plants. ● Employee Satisfaction Survey: Opinions of employees and supervisors were gathered and analyzed through adaptive methodologies. ● Workplace Misconduct/Harassment & Grievances: A total of 6 cases were filed (4 complaints upheld; 2 not upheld). ● Electronic Bulletin Board: Ad-hoc announcements covering various employee welfare matters, Welfare Committee information, important company operational updates, education and training course details, and annual performance management procedures.
Reported To	Reported to the President and the Chairman by the Human Resources Center.

Stakeholder: Customers

How Identified	Customers who made purchases from TECO during the reporting period
Purpose of Engagement	Maintaining Brand Recognition and Loyalty
Communication Channels / Response Methods / Frequency	● Customer Satisfaction Surveys: 1-4 times annually ● Customer service hotline: as needed ● Distributor Roundtables: 1-4 times annually, supplemented by ad-hoc distributor visits ● After-Sales Service Tracking: Post-service follow-up calls after each service event ● Official website and media: updated as needed ● Contact Person: (Spokesperson) Director Chien (speaker@teco.com.tw)
Communication Effectiveness / Outcomes	● Customer satisfaction survey analysis and countermeasures conducted 7 times annually. ● Regular external audits of the Quality Management System (2024/10–2024/11) were conducted 5 times. Internal audits were 9 times; process audits were 97 times; and product audits were 42 times. ● 4 media press conferences were held. ● Participated in 7 exhibitions, including Smart City Summit and Expo, E-Mobility Taiwan, Energy Taiwan, Intelligent Asia Thailand.
Reported To	Reported to the Chairman by the Presidents of each Business Group.

Stakeholder: Suppliers

How Identified	Suppliers with procurement transactions during the reporting period.
Purpose of Engagement	Ensuring sound supply chain operations
Communication Channels / Response Methods / Frequency	● Supplier evaluation: 70 suppliers annually ● Supplier audit: Quarterly ● Supplier greenhouse gas (GHG) inventory guidance: as needed ● E-procurement: as needed ● Contact Person: (Procurement) Director Lin (dora@teco.com.tw)
Communication Effectiveness / Outcomes	● Risk assessments and on-site evaluations were conducted for key suppliers. ● Suppliers signed Corporate Social Responsibility (CSR) commitment letters, achieving 100% signing rate among major suppliers. ● Participated in the 1+N Net-Zero Transformation Promotion Project of Industrial Development Administration, MOEA. Carbon management guidance was provided to 34 suppliers and related enterprises, and 4 series of carbon management courses were held.
Reported To	Reported to the Chairman by the Presidents of each Business Group and the ESG Promotion Office.

Stakeholder: Local communities

How Identified	Industrial Park authorities and nearby communities where we have operations
Purpose of Engagement	Maintaining Positive environmental and social relations
Communication Channels / Response Methods / Frequency	● Industrial Park Service Centers: Ad-hoc ● Industrial Park Joint Defense Initiatives: Quarterly ● Company Website Communication Mailbox: Ad-hoc ● Volunteer activities: Quarterly ● Contact: (PR) Manager Chiang (pr@teco.com.tw)
Communication Effectiveness / Outcomes	● No violations of air pollution emissions or waste management regulations, nor incidents impacting communities. ● Participated in regional joint defense initiatives, fostering inter-company disaster preparedness exchanges to prevent incidents from affecting community environment and safety ● Conducted energy conservation education for local communities and schools. ● Employee participation in public welfare activities totaled 582 person-times, with 1,134 total volunteer hours.
Reported To	Reported to the Chairman by general managers of each business group.

Stakeholder: Civil Organizations and NGOs

How Identified	Industry Associations or Partner Organizations
Purpose of Engagement	Maintaining Positive industry and social relations
Communication Channels / Response Methods / Frequency	● Active participation in various civil associations ● Forums and seminars organized with academic institutions ● Non-financial information disclosure: Annual publication of the corporate sustainability report, detailing concrete actions and outcomes across Environment (E), Social (S), and Governance (G) aspects ● Contact: (IR) Director Chien (ir@teco.com.tw)
Communication Effectiveness / Outcomes	● Participation in business organization forums: 22 sessions involving 50 participants. ● Awarded the Taiwan Corporate Sustainability Report Platinum Award for 11 consecutive years. ● Greenhouse gas (GHG) inventory: Annual verification by British Standards Institution (BSI) against ISO 14064-1, achieving "reasonable assurance level."
Reported To	Reported to the Chairman by general managers of each business group.

Stakeholder: Government agencies

How Identified	Competent Authorities related to business operations
Purpose of Engagement	Maintaining Strong economic and governance performance
Communication Channels / Response Methods / Frequency	● Comply with statutory requirements from competent authorities and submit regular reports ● Participation in forums, public hearings on regulations, and official correspondence organized by competent authorities: Ad-hoc ● Cooperate with supervision and audits by competent authorities ● Contact Person: (Spokesperson) Director Chien (speaker@teco.com.tw)
Communication Effectiveness / Outcomes	● Maintained compliance with statutory requirements from competent authorities, cooperated with regulatory supervision, submitted regular reports, and underwent audits.
Reported To	Reported to the Board of Directors by the Corporate Governance Center

Material Topics

No.	Topic	Explanation of Positive and Negative Impacts	Business activities and sustainable development		Economy, environment, and society
No.	Topic	Explanation of Positive and Negative Impacts	Positive	Negative	Positive	Negative
1	Product R&D and Technological Innovation	Positive: Seizing new business opportunities; becoming an industry leader Negative: High cost and high risk; uncertain market acceptance	●	●	●	○
2	Renewable Energy Utilization	Positive: Reduced energy costs, decreased carbon emissions, and compliance with environmental regulations Negative: Initial increase in capital expenditures, potentially impacting short-term capital spending and financial performance	●	●	●	○
3	Waste Recycling and Resource Recovery	Positive: Enhanced corporate image and brand value; creation of additional revenue Negative: Increased in operational and management costs	●	●	●	○
4	Pollution Prevention and Control	Positive: Enhanced corporate risk management and long-term competitiveness Negative: High installation and maintenance costs for pollution prevention equipment, leading to increased capital expenditures	●	●	●	○
5	Biodiversity	Positive: Reduced regulatory risks related to land use and ecological destruction Negative: Ecological restoration or compensation measures may incur additional financial burdens	○	○	●	○
6	Employee Training and Career Development	Positive: Enhanced employee capabilities and improved organizational competitiveness. Negative: If a transparent career advancement system is not established, it may lead to the risk of employee turnover	●	●	●	●
7	Workplace Diversity and Equal Opportunity	Positive: Promotion of an inclusive organizational culture and innovative thinking; enhanced decision-making quality and team collaboration. Negative: Requirement for resource investment in system design, education and training, and cultural communication	●	●	●	●
8	Employee Benefits and Welfare	Positive: Improved work efficiency and productivity; talent attraction. Negative: Potential for resource misallocation or negative employee perception if welfare programs are poorly designed.	●	●	●	●
9	Labor-management communication	Positive: Reduced labor disputes and legal risks; enhanced employee engagement and organizational stability. Negative: Potential for stakeholder scrutiny if issues are not properly recorded and addressed.	●	●	●	●
10	Occupational Safety and Health	Positive: Reduced the incidence of workplace injuries and occupational diseases Negative: Higher costs required for establishing safety management systems and conducting training.	●	●	●	●
11	Corporate Governance	Positive: Promotion of corporate sustainable development Negative: Potential for stakeholder scrutiny and decreased trust if governance information is inadequately disclosed	●	●	●	●
12	Regulatory compliance	Positive: Reduced operational and legal risks; enhanced corporate stability and market reputation Negative: Increased operational complexity due to multinational regulations and emerging sustainability standards	●	●	●	●
13	Supply chain management measures	Positive: Enhanced operational resilience and stability Negative: Increased management complexity, along with heightened supervision and audit complexity	●	●	●	●
14	Information Security Management	Positive: Protection of customer and corporate data security; maintenance of operational stability and brand trust Negative: Potential for management vulnerabilities and increased internal risks due to insufficient employee cybersecurity awareness	○	●	●	●
15	Raw Material Sourcing and Control	Positive: Promotion of supply chain transparency and sustainable development Negative: Higher costs for establishing traceability mechanisms	●	●	●	○
16	Climate Action and Net-Zero Emissions	Positive: Increased competitiveness and market opportunities Negative: Higher initial investment in transformation costs	●	●	●	○

【Actual】 ● High impact ○ Low impact

【Potential】 ● High impact ○ Low impact

Material Issues for Enterprise Value Creation

Category	Global Economic Policy Challenges: Building North American and Indo-Pacific Supply Chains	Renewable energy use: energy generation and storage	Innovative business opportunities and R&D: Clean technology projects
Material Risk or Opportunity	As the global economic situation changes, Taiwan's CPI rises, the United States has inflation, and China has deflation. New geopolitical changes have affected tariffs, trade embargoes, and supply disruptions, causing changes in supply chain models. In response to global economic policy challenges, TECO has established North American and Indo-Pacific supply chains to cope with cost changes.	Extreme climate events lead to power shortages, which interrupt corporate operations. TECO uses renewable energy to reduce dependence on external power supply and reduce operational risks.	In response to various countries' policy support for green energy, energy conservation and carbon reduction, TECO seizes innovative business opportunities and develops clean technology projects to increase its revenue sources.
Business Case	As global economic and geopolitical changes, as well as the intensification of trade disputes, lead to the implementation of new tariffs and trade embargo policies, this will directly affect TECO's import and export business and the flow of raw materials and products. In addition, geopolitics affects the stability and predictability of various markets, affecting TECO's production efficiency and supply stability. Therefore, TECO needs to balance between different markets in supply chain management, and how to cooperate with the original production base has become a challenge for TECO supply chain management to ensure cost and supply stability.	Power shortages caused by extreme climate events are a common problem around the world. As a multinational company, TECO has multiple global production bases, which has led to increasingly frequent interruptions in corporate operations. This not only disrupts production and delays orders, but also increases the risk of default on orders. TECO must have the ability to create and store electricity in order to respond to external changes in a timely manner.	Nation's policy requirements for green energy, energy conservation and carbon reduction, for example, the United States' green electricity subsidies and Taiwan's 2050 net-zero transformation plan promote the rapid development of the new energy market. TECO has moved from motor sales to energy transformation services. In addition to playing an important role in the IDC computer room engineering industry, TECO has recently experienced strong growth in offshore wind power, offshore onshore substations, and energy storage. The newly established power generation and storage division will integrate resources to pursue virtual power generation opportunities for power privatization, allowing TECO to provide more diversified and high value-added energy solutions, thereby increasing revenue sources.
Business strategies	In response to geopolitical shifts, TECO has established production bases in emerging regions such as Vietnam, India, and Mexico to cultivate its supply chain. Construction of the existing production bases in Mexico and India has been completed, and TECO will continue to develop short-chain production centers to meet market growth and production capacity diversification needs in various regions around the world.	Through the creation of energy conservation and renewable energy (solar energy), we aim to achieve the phased RE30 goal by 2030, and continue expanding solar installations across Europe, America, Australia, and Asia. In 2024, TECO added 5.7 MW of new solar capacity in the U.S. and China, bringing total global installed capacity to 15.73 MW. The total electricity generated from own facilities in 2024 reached 11.92 million kWh, and 1,038 Taiwan Green Electricity Certificates were obtained. By 2030, TECO expects renewable energy to account for 30% of total electricity consumption	TECO is focusing on medium- to long-term clean technology opportunities, with strategies centered on the development of low-carbon products, participation in both government and private energy storage projects, and the integration of resources to expand into virtual power plant (VPP) operations. These initiatives are designed to capture new power market opportunities driven by energy market liberalization
Target/Metric	TECO is expanding its regional short-chain production centers, with facilities in Mexico and India already completed, and the U.S. short-chain expected to be operational in 2025. This strategy enhances supply chain resilience by shortening delivery lead times and reducing dependence on global long-chain production, supporting market growth and capacity diversification.	In 2024, TECO Solar added 5.7 MW of installed capacity, bringing the company's global photovoltaic installed capacity to 15.73 MW. This year, TECO generated 11.92 million kWh of self-generated electricity and obtained 1,038 Taiwan Green Power Certificates. Looking ahead, TECO will continue to increase the proportion of its own renewable energy generation and storage capacity to mitigate external energy risks and support the achievement of its emissions reduction targets. The long-term goal is for renewable energy to account for 30% of total electricity consumption by 2030.	ECO's Clean Technology Engineering sets a mid-term revenue growth target of 9% and a long-term target of 34% by 2025.
Target Year	2025	2030	2025
Progress	TECO has established regional short-chain production centers to strengthen supply chain resilience. In 2023, the Mexico and India production bases were completed, supporting global capacity diversification. In 2025, the U.S. short-chain production center is scheduled for completion, further shortening delivery lead times and reducing reliance on global long-chain supply.	In 2024, TECO expanded its solar power generation facilities by adding 5.7 MW of new capacity in the United States and China, bringing the company's total installed solar capacity to 15.73 MW. During the year, TECO's own facilities generated 11.92 million kWh of electricity, and the company obtained 1,038 Taiwan Green Electricity Certificates, contributing to its renewable energy transition.	To accelerate its transformation into a virtual green power plant, TECO established the Innovative Energy Storage Operation & Development Division in 2023. By leveraging both self-owned projects and EPC projects—including investment in solar power plants, EPC construction of energy storage systems, and sales of related equipment—TECO has steadily expanded its renewable portfolio. In 2024, the company added 5.7 MW of new solar capacity in the United States and China, bringing its total installed solar capacity to 15.73 MW. During the year, TECO's own facilities generated 11.92 million kWh of electricity, and it obtained 1,038 Taiwan Green Electricity Certificates, supporting the long-term goal of renewable energy accounting for 30% of total electricity consumption by 2030.
Executive Compensation	TECO integrates ESG KPIs into senior executives' variable compensation to align pay with sustainability strategies. President & Business Group GMs: 2% of performance on GHG reduction, carbon intensity, green supply chain. Manufacturing Affiliate GMs: 4% on GHG reduction, carbon intensity, key reduction projects, green supply chain. Sales Affiliate GMs: 4% on carbon intensity and low-carbon product sales growth. Mid-/Senior Managers & ESG staff: individual ESG KPIs tied to departmental goals. All ESG KPIs are reviewed under Board-level governance to ensure fairness, transparency, and effectiveness.	The Company integrates ESG KPIs into executives' variable compensation to align pay with sustainability strategies. President & Business Group GMs: 2% of performance on GHG reduction, carbon intensity, green supply chain. Manufacturing Affiliate GMs: 4% on GHG reduction, carbon intensity, key reduction projects, green supply chain. Sales Affiliate GMs: 4% on carbon intensity and low-carbon product sales growth. Mid-/Senior Managers & ESG staff: individual ESG KPIs set by departmental goals. All ESG KPIs are managed under the Company's governance framework, with results reviewed by internal audit and Board-level committees to ensure fairness, transparency, and effectiveness.	TECO Electric & Machinery Co., Ltd. integrates ESG KPIs into executives' variable compensation to align pay with sustainability strategies, as outlined in the 2024 Sustainability Report. The President and Business Group GMs have 2% of their performance tied to GHG reduction, carbon intensity, and green supply chain efforts, while Manufacturing Affiliate GMs are evaluated on 4% based on GHG reduction, carbon intensity, key reduction projects, and green supply chain. Sales Affiliate GMs also have 4% linked to carbon intensity and low-carbon product sales growth. Mid-/Senior Managers and ESG staff have individual ESG KPIs tailored to departmental goals. These KPIs are managed under the company's governance framework, with results reviewed by internal audit and Board-level committees to ensure fairness, transparency, and effectiveness.

Material Issues for External Stakeholders

Category	Supply Chain Decarbonization	Clean Technology Engineering
Material Issue for External Stakeholders	Current greenhouse gas regulations require listed companies to complete independent inventories by 2025. For small and medium-sized enterprises (SMEs), the requirement is to achieve 80% inventory coverage and set reduction targets by 2030. To support this, guidance and capacity-building measures are provided through initiatives such as the “1+N Carbon Management Demonstration Team”, helping SMEs establish inventories, set reduction pathways, and align with low-carbon transition goals.	TECO participates in the construction of public projects for renewable energy and resilient power grids in Taiwan, as well as the electrification of natural gas pipelines in the United States. The progress of the project will affect the environment or society.
Topic relevance on external stakeholders	External stakeholders: Suppliers are key stakeholders affected by this issue, as supply chain carbon reduction directly influences both environmental and social performance. Topic description: With major countries and corporations committing to net-zero goals, supply chain carbon reduction is essential for achieving Scope 3 emission targets. If suppliers fail to reduce emissions, their long-term viability will be at risk. Positive and negative impacts: Many of TECO’s suppliers are small and medium-sized enterprises (SMEs) that often lack the resources and expertise to conduct greenhouse gas inventories and implement reduction measures. While compliance may increase short-term costs and require additional training, these efforts help suppliers build awareness of carbon management, deliver long-term environmental benefits, and strengthen customer trust, thereby improving competitiveness. 2024 results: To accelerate supply chain transformation, TECO provided GHG inventory guidance and training. In 2024, a total of 34 suppliers completed simplified inventories, while 9 key suppliers completed full inventories under the support of TECO and government programs. Overall impact: These actions help reduce overall supply chain emissions, enhance resilience, and lower potential operational and environmental risks for SMEs, ensuring a more sustainable and competitive value chain.	External stakeholders: Terminal electricity users are key stakeholders affected by this issue, as their energy choices directly shape environmental outcomes. Topic description: With global regulations on greenhouse gas reduction tightening, demand for green and renewable electricity is rising. Increasingly, companies seek to purchase renewable power to reduce reliance on traditional fossil fuels and achieve carbon reduction benefits. Positive and negative impacts: The expansion of renewable energy provides clear carbon reduction benefits, but it may also generate localized environmental impacts, such as land use, landscape changes, and noise from solar and wind power facilities. At the same time, uncertainties in the green electricity market and policy frameworks (e.g., adjustments to subsidies) present risks that users must manage. 2024 progress: TECO actively supports renewable energy deployment through public engineering projects for resilient power grids in Taiwan and the electrification of natural gas pipelines in the United States. These efforts directly help end-users reduce electricity-related carbon emissions and indirectly accelerate decarbonization of the broader energy system. Overall impact: Promoting renewable energy enables electricity users to avoid significant negative environmental impacts while enhancing the positive benefits of low-carbon energy, contributing to sustainable energy development.
Output Metric	Number of SMEs completing GHG inventories	Green electricity volume delivered to end users
Impact Valuation	Generated economy benefits for SMEs	Increased environmental value by decreasing SCC from fossil fuel usage
Impact Metric	34 SME completed GHG inventory from TECO’s help. This action generates NTD 6.8 M value for supply chain.	In 2024, TECO’s self-owned facilities generated 11.92 million kWh of green electricity. This achievement created environmental value by reducing carbon emissions, equivalent to a decrease of approximately NTD 7,709,625 in social cost of carbon (SCC)

Contact Us

ESG office

ESG@teco.com.tw