Climate change has become one of the most urgent risks globally. Taking voluntary and proactive measures to identify and manage climate change risks and opportunities is essential for harmonizing financial and economic activities, social well-being, and the Earth's ecology. To mitigate the impact of climate change on business operations, the Company has established a climate change risk management mechanism, which follows the guidance of the TCFD framework and aligns with the SKFH Sustainable Finance Policy. We have incorporated "climate change risk" into the Company's risk management policy and continuously seek improvement by integrating it with our existing corporate risk management framework. We employ three lines of defense for internal control to manage climate change risks effectively.

Climate Risk Management Framework

The Company's climate change risk management is divided into three lines of defense, with responsibilities assigned accordingly. The business units are responsible for risk adaptation and mitigation actions, while the risk management unit conducts regular risk identification and establishes a climate change matrix. Through scenario analysis and stress testing, the impact of climate change risks is assessed, and relevant indicators are set for monitoring. The audit unit later verifies and provides recommendations.

Climate Risk Management Mechanism

Shin Kong Group's climate change risk management mechanisms	"SKFH Sustainable Finance Policy" "Finance-related carbon emissions management guidelines" "Guidelines for managing large exposures in individual countries, regions, and industries"
SKL's climate change risk management mechanism	"Climate Change Risk Management Guidelines" Management of the three aspects of investment and financing activities, insurance services, and operating activities.