Identify climate risk issues, systematic management, taking climate action

In the face of global climate change issues, we will actively fulfill and promote the net-zero goals of reaching 50% renewable energy use in 2030 and 100% renewable energy use in 2050 through the three major aspects of "green design", "energy saving and carbon reduction" and "sustainable supply chain management", achieving net-zero greenhouse gas emissions.

 

 

Links between the four core pillars of the TCFD framework and related Issues

4.1.1

Novatek identifies and evaluates the potential impacts of climate change in accordance with aspects such as operational activities, service provision and environmental interaction, and takes into account the norms of international initiatives related to sustainability and climate change as well as Taiwan's environmental sustainability regulations to implement countermeasures and formulate management policies. Novatek actively identifies its climate-change related risks and opportunities, strengthens its response measures in the face of such risks, and takes this opportunity to create a competitive advantage for the Company.

 

The “ESG Sustainability Committee” is the Company’s highest-level internal decision-making body for sustainable development. The Committee is chaired by the Vice President and Company Spokesperson, who is designated by the Chairman, and works together with the Chairman, the President, and senior executives from various functional areas in management meetings to formulate the Company’s medium- to long-term sustainability objectives.

To incentivize managers to prioritize long-term performance and continuously enhance the Company's sustainable governance capabilities and corporate value, a long-term incentive mechanism for managers has been introduced. This mechanism aligns with the Company’s operational strategic objectives and annual ESG plans by setting three-year ESG performance targets for managers. The performance-based bonus is determined based on the achievement of individual target indicators and is subject to review and approval by the Remuneration Committee and the Board of Directors. The allocated bonus is granted as a lump sum after three years. The ESG performance indicators include specific targets across three major ESG dimensions, comprising a total of ten key metrics: renewable energy targets, the proportion of revenue from energy-efficient new display products, absolute reduction in greenhouse gas emissions (Scope 1 and 2), water conservation rate, corporate governance evaluation ranking, MSCI annual ESG rating, CDP rating, ranking of the average salary of non-executive employees among listed companies, social contribution—proportion of donors to the Novatek Social Caring Fund, and the per capita participation rate in employee-friendly and health-promoting activities.

 

Governance

Dedicated Unit
  • Novatek designates the Board of Directors as the highest governance body responsible for climate change oversight. Under the Board, the “Nomination and Sustainable Development Committee” serves a supervisory role, with an Independent Director acting as the Committee Chairperson. At least twice annually, the Chairperson of the Company’s internal “ESG Sustainability Committee” reports to the Committee on ESG- and climate change-related performance, impact assessments, and progress toward sustainability targets.
  • Novatek has established the “ESG Sustainability Committee” as the core body responsible for advancing the Company’s sustainability initiatives. Under the supervision of the Committee Chairperson, two Secretaries-General are appointed, and five task forces have been established, covering Corporate Governance, Partner Prosperity, Environmental Sustainability, Friendly Workplace, and Social Participation. These task forces integrate and coordinate cross-functional corporate resources to identify climate-related issues associated with the Company’s operations, formulate corresponding climate strategies, and monitor progress toward target achievement.

Regular Follow-ups

The ESG Sustainability Committee is responsible for promoting the development of ESG, climate and environmental strategies, coordinating and managing various climate and environmental goals. The Committee holds at least two meetings each year to monitor the implementation of these goals. The Risk Management Committee is responsible for supervising the effectiveness of the operation mechanism, and at least once a year, reports regularly to the Audit and Risk Committee and the Board of Directors on the planning and implementation of these goals. This helps the Board of Directors track progress, provide feasible strategies or other directional suggestions, and urge management to evaluate and adjust planning issues.

Strategy

Risk Analysis

Establish climate risk management tools to analyze the significant financial impacts that major climate risks may bring, identify short-term, medium-term, and long-term climate-related risks and opportunities, and enhance climate resilience.

Design and R&D (Clean Technology)

Committed to the design and research of smart imaging and display technology ICs, we strive to be a trusted global partner for customers while also addressing sustainability trends by developing innovative products that are energy-efficient and reduce carbon emissions.

Renewable (Clean) energy

 Set up a solar power generation system, continuously evaluate the purchase of renewable energy, and increase the percentage of renewable energy use year by year.

Energy-saving installations

 Continue to carry out the plan to replace old equipment and purchase energy-saving facilities to improve energy efficiency.

Promotion of supplier sustainability project

 Work closely with suppliers to enhance sustainability management processes and jointly address environmental sustainability issues through negotiations or exchange forums, creating a sustainable value chain.

Risk

management 

Risk Assessments

Novatek's "ESG Sustainability Committee" conducts a potential risk assessment for the Company through the risk identification process, summarizes major climate risk issues as well as the corresponding risk management measures, reports to the Risk Management Committee on the implementation of risk management and control on a quarterly basis, and performs regular reviews and tracking.

Assessment Follow-ups

Novatek reviews the changes in policies, regulations, technologies, markets and business reputation on transition risks and opportunities every year. Furthermore, it strengthens the regular review of the assessment results of physical risks, transition risks and opportunities through climate risk management tools, and continues to make adjustment on a rolling basis.

Sustainability Forums

 Through holding the supply chain sustainable operation exchange forum, the sustainable management process for suppliers is improved, allowing suppliers to jointly respond to environmental sustainability-related issues and creating a supply chain with sustainable value.

Metrics

& Targets

Reduction of Energy Consumption

 The energy consumption of full-range main products is reduced by 2~5% compared with the previous year.

Conserving Water and Power

Set internal water and electricity saving standards every year, regularly track the achievement of goals, and actively respond to the risks associated with climate change.

Renewable (Clean) Energy

Increase the procurement of renewable energy and the targets for the use of renewable energy: 20% by 2026, 25% by 2030, and 100% by 2050.

International Verification

Promote suppliers to obtain a number of certificates for ISO management system verification, including carbon emissions and disclosure, water footprint and energy management, and work with suppliers to follow the Company's sustainable development goals.

Climate change risk and opportunity identification

The extreme weather caused by the increasingly severe climate change may have a serious impact on business operations and finances. Novatek implements climate change risk and opportunity identification according to the TCFD, and considers internal as well as external environmental changes to identify potential impacts and possible risks/opportunities on the Company's operations and finances, and formulate corresponding management policies:

Climate change risks
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Climate change opportunities
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Climate change indicator and target setting

Based on the above identified climate change risks and opportunities as well as the corresponding management policies, Novatek has established a tracking system. The goals and results of each climate change issue in 2025 and the goals for 2026 are detailed in the following table:

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  • Key supplier refer to the top three suppliers in terms of supplying capacity for the year or potential suppliers based on the evaluation of procurement amount, products, services, and business partnership

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  • Note 1：Key overseas supplier refers to Novatek’s overseas wafer and backend process outsourcing production suppliers
  • Note 2：Key supplier refer to the top three suppliers in terms of supplying capacity for the year or potential suppliers based on the evaluation of procurement amount, products, services, and business partnership

Internal Carbon Pricing

Amid the escalating impacts of global climate change, Novatek remains committed to implementing energy saving and carbon reduction initiatives and fulfilling its net-zero commitment. In 2025, the Company completed the planning and pilot implementation of its internal carbon pricing mechanism. Through the establishment of a “carbon pricing” framework, the Company aims to strengthen internal awareness of carbon management, enhance decarbonization efforts, and further improve its internal carbon management mechanisms.

Principles and Scope of Application of Carbon Pricing

The Company has comprehensively considered international trends, government regulations, estimated renewable energy procurement prices, and carbon reduction investment costs, and has adopted the concept of an implicit price to establish an Internal Carbon Pricing (ICP) mechanism at NT$4,000 per metric ton of carbon emissions. The mechanism has been implemented across four major scopes of application:

 
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Carbon Management Platform

To fulfill its carbon reduction commitments, Novatek has completed the establishment of a carbon management platform integrating greenhouse gas emissions data from all operational units across the Company. The platform is updated on a monthly basis to enhance the efficiency of emissions data collection and processing, while providing clear analytical results by region and emission source. These insights enable each department to identify emission hotspots and formulate targeted carbon reduction initiatives.

 

Based on the platform data and in conjunction with the internal carbon pricing mechanism, the Company calculates potential carbon emission costs on a monthly basis and discloses the results in the management reports of each operating unit, thereby assisting departments in evaluating the actual operational and financial impacts of carbon emissions. In addition to continuously promoting the innovation and development of low-carbon products, the Company has also incorporated carbon cost factors into product development and investment decision-making processes to advance low-carbon innovation and sustainable operations.

 

Effectiveness of Implementation

As of 2025, the Company has continued to invest in and implement various energy efficiency enhancement measures. In addition to procuring products bearing energy-saving labels and adopting automated lighting and air-conditioning control systems, the Company has also invested in upgrading information technology equipment to improve data center energy efficiency and incurred capital expenditures for replacing outdated motors with high-efficiency energy-saving motors. These initiatives have cumulatively achieved electricity savings exceeding 12.16 million kWh, equivalent to a carbon reduction of more than 5,765.4 metric tons. Based on the internal carbon pricing mechanism, the estimated avoided external carbon costs amounted to approximately NT$23.06 million. Meanwhile, the R&D division has increased the target proportion of revenue generated from energy-efficient new display products, demonstrating that the ICP mechanism has delivered tangible results in promoting energy saving and carbon reduction.

 

Participation in the CDP Carbon Disclosure Project

Novatek voluntarily responds to the Carbon Disclosure Project (CDP) non-profit organization’s questionnaire, disclosing information related to climate change management and water security on an annual basis. This includes data on greenhouse gas emissions and reductions, as well as water usage and reduction efforts. Additionally, Novatek reviews and improves risks and opportunities across various aspects such as regulations, climate scenario simulations, financial performance, and operations, and discloses this information on the CDP website for stakeholders’ reference. In 2025, Novatek received a CDP Climate Change Rating of A- and a Water Security Rating of B, recognizing the Company’s management level performance.

 
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Protect Biodiversity

Declaration of Biodiversity

Biodiversity Achievements

To support global sustainable development, Novatek has long engaged in interdisciplinary collaboration with academic research institutions and stakeholders in fields ranging from environmental protection to biodiversity conservation. Through practical actions and corporate efforts, Novatek is committed to maintaining natural ecosystems and advancing the United Nations Sustainable Development Goals. Novatek is an IC design company primarily engaged in chip design and sales, while all product manufacturing processes are outsourced to professional wafer foundries and packaging and testing service providers. By referencing the “National Ecological Network Blueprint” published by the Ministry of Agriculture and comparing it against the addresses of its operating offices in Taiwan, the Company incorporated resource consumption and material emissions generated during operations into its assessment framework to identify specific mitigation and restoration directions. The assessment results indicated that none of the Company’s operating sites in Taiwan are located within 2 kilometers of wildlife protection areas or nature reserves. In addition to continuously maintaining green ecosystems within its operational sites and promoting environmental education, Novatek Microelectronics also collaborates with stakeholders including government agencies and conservation organizations to evaluate and advance opportunities for local conservation initiatives around its facilities, thereby deepening the diverse value of biodiversity.

Since 2024, Novatek Microelectronics has formally incorporated biodiversity into its corporate sustainability strategy. Through the implementation of corporate sustainability responsibilities, the Company seeks to mitigate the risks and impacts arising from climate change. Furthermore, Novatek Microelectronics signed a memorandum of understanding with Yushan National Park Headquarters. Beginning in 2026, in addition to maintaining existing trail infrastructure conservation efforts, both parties will expand their collaboration into core biodiversity initiatives, including species conservation programs for the Formosan black bear and environmental education advocacy activities.

 

  • Novatek has long been committed to mountain forest conservation and biodiversity initiatives within protected national forest areas over the years:

Yushan National Park Trail Maintenance

Since 2007, an annual budget of NT$500,000 has been donated for trail maintenance, for a total of NT$9.5 million over 19 years. This sustained effort is dedicated to the conservation and sustainable preservation of Taiwan's high-mountain forest ecosystems. In 2025, it received the “Team National Park SDGs Partner” recognition from the National Park Service, Ministry of the Interior. Beginning in 2026, in addition to maintaining existing trail infrastructure, the Company will further expand into biodiversity initiatives through Formosan black bear conservation and environmental education programs.

Adoption of the "Skyline Viewing Area" Air Quality Purification Zone in Hsinchu City

Starting from 2022, volunteers of Novatek regularly visit the "Sea Viewing Park" of the Hsinchu Air Quality Purification Zone, where they have carried out environment cleaning work for 4 consecutive years. In 2025, four sessions of volunteering work were held for this purpose.

Beach Cleanup Event

Novatek Foundation organized 1 Beach Cleanup event in 2025.

Environmental Education Programs for Rural Elementary Schools

In 2025, environmental education programs for children were implemented in rural elementary schools in Hsinchu County and Tainan City, comprising a total of 110 environmental courses, exhibition-based teaching activities, and public screening sessions, with total sponsorship funding amounting to NT$2.18 million. Through collaboration with civic organizations to advance environmental education and biodiversity awareness, the Company obtained the “Biodiversity Achievement Certification” issued by the Forestry and Nature Conservation Agency, Ministry of Agriculture.
 
Spotlight
Environment Spotlight

Climate Change Response

Since 2021, Novatek adopted the framework of the Task Force on Climate-Related Financial Disclosures (TCFD). Through close discussions as well as the implementation of training courses across organizations and various responsible departments, employees can better understand the structure and concept of the TCFD, so that they can be internalized into the scope of work for departments to strength the follow-up work outputs.

Internal Carbon Pricing

Novatek remains committed to implementing energy saving and carbon reduction initiatives and fulfilling its net-zero commitment. In 2025, the Company completed the planning and pilot implementation of its internal carbon pricing mechanism. Through the establishment of a “carbon pricing” framework, the Company aims to strengthen internal awareness of carbon management, enhance decarbonization efforts, and further improve its internal carbon management mechanisms.The Company has comprehensively considered international trends, government regulations, estimated renewable energy procurement prices, and carbon reduction investment costs, and has adopted the concept of an implicit price to establish an Internal Carbon Pricing (ICP) mechanism at NT$4,000 per metric ton of carbon emissions. The mechanism has been implemented across four major scopes of application.As of 2025, the Company has continued to invest in and implement various energy efficiency enhancement measures. In addition to procuring products bearing energy-saving labels and adopting automated lighting and air-conditioning control systems, the Company has also invested in upgrading information technology equipment to improve data center energy efficiency and incurred capital expenditures for replacing outdated motors with high-efficiency energy-saving motors. These initiatives have cumulatively achieved electricity savings exceeding 12.16 million kWh, equivalent to a carbon reduction of more than 5,765.4 metric tons. Based on the internal carbon pricing mechanism, the estimated avoided external carbon costs amounted to approximately NT$23.06 million. Meanwhile, the R&D division has increased the target proportion of revenue generated from energy-efficient new display products, demonstrating that the ICP mechanism has delivered tangible results in promoting energy saving and carbon reduction.

Participation in the CDP Carbon Disclosure Project

Novatek voluntarily responds to the Carbon Disclosure Project (CDP) nonprofit organization’s questionnaire, disclosing information related to climate change management and water security on an annual basis. This includes data on greenhouse gas emissions and reductions, as well as water usage and reduction efforts. Additionally, Novatek reviews and improves risks and opportunities across various aspects such as regulations, climate scenario simulations, financial performance, and operations, and discloses this information on the CDP website for stakeholders’ reference. In 2025, Novatek received a CDP Climate Change Rating of B and a Water Security Rating of A-, recognizing the Company’s management level performance.

Name Here

Protect Biodiversity

As Novatek strives to fulfill its environmental responsibility and monitor international developments, mitigation of environmental impacts remains a top priority. Novatek incorporates biodiversity risk factors into its assessments and develops response action plans. Through concrete actions, and by leveraging corporate strength, the Company aims to preserve natural ecosystems and achieve the United Nations Sustainable Development Goals (SDGs). In 2024, Novatek officially integrated biodiversity into its corporate sustainability strategy, aiming to mitigate the crises and impacts of climate change through the implementation of corporate sustainability. In addition to continuously maintaining green ecosystems within its operational sites and promoting environmental education, Novatek Microelectronics also collaborates with stakeholders including government agencies and conservation organizations to evaluate and advance opportunities for local conservation initiatives around its facilities, thereby deepening the diverse value of biodiversity.

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GHG & Energy Management