In response to the impact of climate change issues, the Company follows the guidelines provided by the Task Force on Climate-related Financial Disclosures (referred to as TCFD) proposed by the Financial Stability Board (FSB). Analysis of the impacts of climate change by the ESG Working Group. In addition to analyzing the risks brought by climate change and the Company's countermeasures, it also proposed new products and new market opportunities that the Company can grasp under the climate change in the future. At the same time, Chroma has set the goal of "net-zero emissions at office sites by 2030 and net-zero emissions across all facilities by 2050." The Company is working toward this goal by conducting inventories of production and office environments, improving manufacturing processes, and promoting green product design, gradually transitioning from low-carbon practices to net-zero emissions.

1-1 The Board of Directors is the highest governance body of the Company for the management of climate-related risks and opportunities. The Board of Directors is responsible for supervising and reviewing its strategic development and policy formulation, including risk identification and strategy formulation in all aspects of the Company, to ensure that the Company can mitigate future impacts and develop potential opportunities. Director David Huang has been appointed as the person in charge.

1-2 Members of the Board of Directors have a thorough understanding of the importance and impact of climate change. Climate-related issues have already been incorporated into major investment decisions. For example, topics such as carbon management and the use of energy and resources in response to climate change risks are carefully reviewed and discussed to ensure informed decision-making.

2-1 The ESG Task Force evaluated the 17 climate-related risks and 20 climate-related opportunities outlined in the TCFD framework based on Chroma's core measurement business and future market development. These risks were assessed in terms of their likelihood and urgency, categorized by short-, medium-, and long-term timeframes. The team conducted discussions and prioritization to develop a climate risk matrix.

We classified climate change-related risk issues based on their impact and probability, and summarized the relative quantitative impact of these risk issues, along with the associated opportunities and response strategies. The climate risk matrix is prioritized by significance, as shown below:

*Red text indicates short-term risks (1-3 years); others represent medium- to long-term risks (3-10 years).

To further assess the potential financial impact of climate change risks, the ESG Working Group used a risk matrix to prioritize and determine the most important climate-related risk issues, conducted relevant financial assessments, and developed corresponding response strategies. These initiatives aim to ensure business continuity and enable sustainable operations.

We have assessed the possible financial impact that the four types of transformation risks and one physical risk may bring, as follows:

The development of a low-carbon economy will also support Chroma in accelerating the development of low-carbon products and technologies. According to assessments conducted by the ESG Working Group and the management team, the opportunities presented by climate change outweigh the associated risks for Chroma. Nevertheless, both opportunities and risks must be considered simultaneously, with a focus on expanding market opportunities.

We classified climate change-related opportunities based on their impact and probability. The results are presented in the figure below. Chroma's team believes the greatest opportunities lie in climate-related opportunities associated with products and services, including research and development and innovation of new products and services, the development and/or expansion of low-carbon products and services, and business diversification.

*Red text indicates short-term risks (1-3 years); others represent medium- to long-term risks (3-10 years).

We have assessed the possible financial impact that the three types of transition opportunities may bring, as follows:

3-1 In order to assess climate-related risks, Chroma's ESG Task Force referred to the TCFD Guidelines, the Global Risk Report, and the Taiwan Climate Change Research Report for 2050. Taking into consideration the actual conditions of its operating markets, the team conducted a comprehensive evaluation of both transition risks and physical risks as outlined in the TCFD framework.

3-2 After the first TCFD report was released by the ESG Task Force in 2022, the Company adopted an annual risk assessment approach to manage the currently identified climate-related risks and opportunities. Following reporting to the Board of Directors, the results will be disclosed in the corporate sustainability report.

3-3 Response measures have been developed for four major transition risks, including rising raw material costs, the transition to low-carbon technologies, the replacement of existing products and services with low-carbon alternatives, and greenhouse gas emissions, as well as one significant physical risk, which is extreme weather events such as hurricanes and floods.

To assess climate-related risks, the ESG Office referred to the TCFD Guidelines, the Global Risks Report, and the Taiwan Climate Change Research Report for 2050. Taking into account the Company's actual operating conditions, it separately evaluated the 13 transition risks and four physical risks identified in the TCFD framework.

In terms of risk management procedures, we conduct identification and analysis annually, integrate climate change issues into environmental risks, and incorporate them into our corporate risk management system.
We adopted a matrix assessment approach, evaluating various factors based on the "probability of occurrence" multiplied by the "potential impact" (using a 0-5 scale to indicate low, medium, and high levels). The ESG Working Group considered the actual conditions of each customer. Following an internal control review, issues are prioritized and categorized by "urgency" (including short-, medium-, and long-term horizons).
Chroma completed its ISO 14064-1:2018 greenhouse gas inventory in 2021. In 2022, the Company initiated TCFDaligned climate-related financial assessments and published its first report. We will implement countermeasures for identified risks and opportunities across functional departments, establish specific reduction management procedures, and ensure we understand and monitor changes through annual risk assessments. In the future, we will proactively set science-based targets (SBTs).

4-1 Based on the above strategies and risk management processes, the ESG team has identified corresponding measures that require immediate action. Each year, we will implement a quantitative tracking and management mechanism for each of the above indicators.

4-2 For greenhouse gas emissions, 2021 is defined as the base year, with the scope covering Scope 1 and Scope 2. We have also set the goal of "achieving net-zero emissions at office sites by 2030 and across all facilities by 2050". The Company completed thirdparty verification of greenhouse gas emissions in accordance with ISO 14064-1 in 2021 (which also serves as the base year), and will continue to collect carbon emission-related data in accordance with the established methods to ensure the accuracy of greenhouse gas emissions. We regularly disclose data related to greenhouse gas emissions in our sustainability reports and communicate this information with stakeholders.

4-3 In light of the global wave of net zero emissions and the carbon border mechanisms in Europe and the US, the transition to net zero is no longer an environmental issue; it is an economic issue critical to the international competitiveness of companies. The industry continues to promote the deployment of green energy, bringing business opportunities in smart cities, smart transportation, smart grids, and energy storage. Chroma offers testing solutions across various green energy technology sectors and has received repeated recognition from leading international manufacturers. Leveraging its innovation in measurement technology, the Company has developed a range of energy recovery testing solutions to meet global green initiatives. These solutions not only help customers save on high electricity costs but, more importantly, reduce carbon emissions, thereby driving and accelerating the industry's transition to net zero. Looking ahead, Chroma will continue to focus on developing low-carbon products that enhance user benefits and provide customers with a broader range of solutions. In 2023, following the release of Chroma's first Climaterelated Financial Disclosures (TCFD) report, the Company established management targets, formulated response strategies and action plans, and began systematically disclosing the progress and outcomes of these climate-related efforts.

4-4 At the end of 2024, Chroma signed a green power wheeling agreement with a renewable energy provider. The agreement is expected to supply 900 thousand kWh of green electricity in the first year, accounting for 5% of the Company's total electricity consumption. Starting in 2025, Chroma plans to increase the proportion of green electricity by an average of 5% each year, aiming to achieve RE30 by 2030.

Based on the above strategies and risk management processes, the ESG team has identified the corresponding measures that require immediate action and the indicators to be tracked in the future as follows:

Chroma has established quantitative tracking and management mechanisms for key indicators, continuously monitored and optimized by relevant departments.