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Response to Climate Change Climate Change Governance Climate-Related Risk and Opportunity Identification Response to Climate Change Risks Climate Change Related Opportunities Climate Change Related Objectives
Response to Climate Change Risks
Code Topic Timeframe Exposure level Description of risk impact scenarios Potential financial impact caused by the incident Mitigations
4 Sustainable Aviation Fuel，SAF Short-term
(<3 years)		 Medium The company's warehousing centers and import and export ports are located across Taiwan, Hong Kong, China and Singapore and other Asian regions, as well as El Paso, Texas, the United States (the cooperation partner has been negotiated, not yet operated), while the European Union, the United Kingdom and Singapore have relatively clear regulations or orders on sustainable aviation fuel:
  1. EU Sustainable Aviation Fuel Regulation:
    On October 23, 2023, the European Union issued the “Regulation on ensuring a level playing field for sustainable air transport (ReFuelEU Aviation)”, which requires aviation fuel suppliers to gradually increase the proportion of sustainable aviation fuel supply, starting from January 1, 2025, to at least 2% per year and at least 70% by January 1, 2050. For flights departing from EU airports, airlines must add at least 90% of the fuel consumption at the airport according to the fuel requirements recorded in their flight plans to ensure the use of sustainable aviation fuel.
  2. UK Sustainable Aviation Fuel Mandate:
    In April 2024, the UK Department for Transport passed the sustainable aviation fuel mandate, which requires all flights departing from the UK to use 10% SAF by 2030, subject to parliamentary approval, which will come into force in January 2025. The order requires fuel suppliers and airlines to comply with a target of 2% of sustainable jet fuel supply by 2025, and gradually increase to 10% by 2030 and 22% by 2040.
  3. Singapore's Sustainable Aviation Hub Blueprint
    The Civil Aviation Authority of Singapore (CAAS) announced in February 2024, that starting from 2026, 1% of the fuel on all flights departing from Singapore must be SAF, and that a SAF tax will be levied on the purchase of SAF, with a target of further increasing to 3-5% by 2030. The actual figures will be determined by global market development and supply situation.
    As countries respond to climate change and promote the decarbonization transformation of air transportation, they have successively formulated sustainable aviation fuel (SAF) usage targets and related policies and measures, and have reduced greenhouse gas emissions from aviation activities by forcing or guiding airlines to increase the proportion of SAF blending. If the proportion of SAF usage continues to increase and the cost is still higher than that of traditional aviation fuel in the short term, the relevant costs may be passed on to the client by the airline or logistics company, thereby driving up the company's transportation and operating costs.
 As the transportation industry is regulated by laws and regulations and needs to introduce carbon reduction measures, the transportation industry is likely to face higher costs when sustainable aviation fuel is more expensive than general fuel, which will affect the billing method of users in the future. At present, the major international express companies that the Company cooperates with have introduced carbon reduction measures, but there is still no significant increase in transportation costs, except for Singapore where the Company’s subsidiary will face an increase in freight cost in early 2026. In the medium to long term, with the assumption that the cost of SAF remains higher, and the courier companies that the Company cooperates with will only increase the usage of SAF sustainable aviation fuel and other carbon reduction measures, which will inevitably increase the Company's air freight costs. Short-term:
  • Continue to pay attention to the sustainable aviation fuel regulations, and communicate with logistics operators in both directions to ensure the efficiency of air freight costs.
  • Due to the frequent demand for air freight but with small volume of single orders, as part of semiconductor component distributors nature, a three-point warehouse network has been established in Taiwan, Hong Kong, and Singapore, which helps reduce the proportion of urgent orders and air freight through pre-positioned-inventory.
Medium and long-term:
  • The product line structure should be adjusted in a timely manner and the transportation flight route should be optimized to maintain the profitability of each product line.
  • As a semiconductor component distributor, the range of gross profits is usually limited. A transparent cost structure can help our customers understand the necessity of adjusting quotations due to the increase in freight cost.
8 Transition Demand for Low-Carbon Products and Services and Change in Customer Preferences Short-term
(<3 years)		 Medium In response to global decarbonization and to meet low-carbon technology transformation, where low-carbon products and services are preferred, if the Company cannot accommodate such change in customer preferences, the Company may face loss of customer orders or incur higher costs due failed R&D projects or the agent line does deliver performance that compensates its initial cost. In the short term, R&D costs and machinery and equipment purchase costs will increase. If the market demand for the expanded product line rises, the product portfolio and revenue structure will be optimized in the medium and long term; if the product line does not deliver performance, the Company may face less revenue than anticipated.

Weikeng's total R&D expenditure reached NT$ 130,996 thousand in 2025, within which 22.17% was dedicated to green product R&D, which meets the target of no less than 20% of total R&D expenditure.

Increase in cost relating to talents retention: the Company appointed the trust department of Hua Nan Bank to establish the "Employee Stock Ownership Trust Plan" in August 2024, in hopes to help employees’ to form or enhance employees’ savings and investment habits. For each member of the Trust, an aggregated amount of self-withdrawal from monthly salary and an incentive disbursed by the Company with ratio range from 1:1 to 1:1.1 ratio. In December 2024, the Company’s employee stock option plan was approved by regulators, which then issued in 2025Q1-Q2. The above provides the summary of most recent and future talents retaining plans.		 Short-term:Proactively engage with upstream and downstream partners and gather market insights, so that the Company can evaluate feasibility of joint R&D projects with the vendors in a timely manner to seize business opportunities that may arise from low-carbon trends.
Medium and long-term:Continuously cultivate talents related to green product solutions, and ensure we offer employee benefits and salary that are pari passu with the Company’s peers, or introduce more attractive compensation packages to retain talents.
10 Extreme Climate Events Short-term
(<3 years)		 Medium The company's main warehouses and services are mainly locating in Asia, including Taiwan, Hong Kong, China and Singapore, other regions include El Paso, Texas, the United States (the cooperation partner has been negotiated, not yet operated), and our main vendors are locating in the United States (majority), Germany, Netherlands and China. Most of the warehouses and vendors are exposed to extreme weathers such as typhoons, heavy rains and floods and heat waves. Due to the imbalance and extreme changes of weather, it causes financial losses such as disruption of the Company’s own operations or industry supply chain (operation shutdown, inability to ship goods, inability to delivery raw materials, etc.).
The following incidents may occur:
  • Unusual snowstorms that close roads, suspend or delay air and railway operations, power outages, etc. and extreme weather may affects aircraft load capacity, changes in routes or flight delays;
  • 2. Heat waves may cause blackout/energy rationing, transportation interruptions, reduced working days, and physical damage to infrastructure. Moreover, continuous high temperature can increase air conditioning usage, resulting in an increase in electricity bills;
  • It is crucial to evaluate the frequency of typhoons or heavy rains and floods and severity of impact in the said regions. Serious flooding may cause road closures, power outages, flight delays, airport closures, etc., resulting in delivery delays or even supply interruptions. We reference the NGFS scenario to stimulate possible outcomes1. The analysis shows that the economic losses in China, the United States, and Germany will increase more than those in Taiwan and Hong Kong in 2030.
 The Company’s warehouse in Hong Kong has encountered shipment delay due to typhoon in 2025, but there was no impact on orders nor losses from the incident. However, losses from business interruptions may still occur in the future, resulting in reduced sales revenue and increased operating costs (repair or replacement of operating equipment):
  1. Blackouts or energy rationing may occur due to severe weather, which could result in operating losses.
  2. Heat waves may reduce work efficiency or number of working days which could result in operating losses.
  3. Heat waves may cause damages to external infrastructure, personnel injury, or potential business interruptions for the Company.
  4. In order to actively achieve net-zero emissions by 2050, the cost of transition will increase.
  5. Financial losses caused by supply chain disruption due to extreme weather.
  6. We mainly focus on analyzing the Group’s main operating warehouses which are Taipei Neihu Tanmei Warehouse and Taoyuan Housheng Warehouse in Taiwan; Shatin Warehouse and U-Freight Warehouse in Hong Kong; warehouses in Shenzhen China; and Singapore Warehouse.
    If the above warehouses face operation interruption due to flooding, delay in shipping may cause losses in sales or assets. Based on the group's average daily shipping business in 2025 (estimated on a 365-day basis), the estimated losses are summarized as follows:
    7. WarehouseEstimated Loss / day
    (USD thousand)
    Taipei Neihu Tanmei925
    Taoyuan Housheng326
    Shatin, HK4,511
    U-Freight, HK1,083
    Shenzhen, China2,268
    Singapore181
  7. Increase in operational cost due to obtaining ISO certificates or other external verifications for strengthening warehouse resilience and safety protection.
 Short-term:
  • Establish related policies and obtain ISO certification to ensure employee occupational safety and strengthen the protective resilience of warehouses.
  • The Group's parent company, the Tanmei Warehouse in Neihu, Taipei and Housheng Warehouse in Taoyuan have implemented the ISO 45001 Occupational Health and Safety Management System. Additionally, the Shatin Warehouse in Hong Kong, Tanmei Warehouse in Neihu, Taipei, and Housheng Warehouse in Taoyuan have implemented the ISO 9001 Quality Management System for Warehousing Services.
  • Arrange protective measures of the warehousing center in advance and react timely to any typhoon, rainstorm or drought warnings issued by Central Weather Administration. Apart from basic protective measures such as packaging protection for transportation of goods, the Company shall proactively request the logistics provider to take precautions in advance to ensure the safety protection transporting goods, to avoid operational interruption, delay or wet cargo damage caused by related possible disasters.
  • The Company will continue to observe the evaluate relocations of industrial supply chains and the evolution of extreme climate.
Medium and long-term:
  • Regularly inspect and assess natural disaster defense measures and processes at operating locations, including warehouse centers, invest in equipment to bolster short-term defense to minimize losses from natural disasters in the future, fortify hardware defense, and enhance organizational disaster resilience.
  • Regularly evaluate the feasibility of additional or moving of warehouses.
  • The Company will introduce or invest in equipment, technology, and systems year by year, that are conducive to energy-saving, energy efficiency improvement, and carbon reduction, including replacing outdated equipment, digital energy saving, purchasing green electricity, and other such measures, to reduce the energy consumption and carbon emissions.
14 Climate Change Triggering Increase in Insurance Cost Short-term
(<3 years)		 Medium Due to the emergence of extreme weather events due to climate change, the five major U.S. insurance companies, namely Nationwide Insurance, American Family Life Insurance, National Insurance Company, Erie Insurance and Berkshire Insurance, have decided to terminate their underwriting business in natural disaster risk areas, exclude insurance items caused by different weather events, and increase monthly premiums and deductibles.
Insofar, the Company's main cargo insurance, including transportation insurance and storage insurance, has not been rejected by the insurance company. However, due to climate change, the Company is still facing higher insurance costs and increased difficulties in insurance arrangements due to the increase in the loss rate of the insurance company.		 In the past two years, namely 2024 and 2025, the Group's cargo insurance cost accounted for 0.06% of the Group's turnover for both fiscal years. The increase in insurance costs reached 14% yoy in 2025, mainly due to an significant increase of transportation activities to cater procurement and sales as the Group annual sales increased 21% yoy. and also from an incident where stocks were exposed to heavy rains at a transit site. Although the premium increased significantly, the ratio of premiums to revenue increased by only 0.01 percentage points, which was still deemed within Group's acceptable range.

Due to the water and moisture exposure incident during the transportation of goods in 2024, the loss rate of insurance companies in that year increased, resulting in an increase in insurance premium in 2025; However, with the cooperation of the logistics department and cargo contractor, there was no major incidents of cargo exposure caused by extreme weather, insurance renewal for 2026 took place in the end of 2025, and the Group's insurance costs are estimated to be reduced by US$560 thousand (YoY-29%) year-on-year. In addition, due to the good loss ratio in 2025, the Company is expected to receive a premium rebate of approximately US$91,000.-		 Short-term:
  • Rely on international insurance professional institutions to assist in the arrangement:
    In response to the Group's operation, the planning of cargo insurance (transportation insurance + inventory storage insurance) is entrusted to the Taiwan branch of Marsh & McLennan Inc (MMC), a professional international insurance brokerage company, to be responsible for planning and arrangement, and currently adopts STP (Stock Through Put) + PD (Property Damage) insurance structure. Covering the goods from the upstream vendor shipment to the warehouse of our affiliated company (including subsidiaries) to the customer or VMI Hub warehouse, including the entire transportation insurance and storage insurance, MMC Taiwan Branch provides industry-related brokerage business, consulting and claims advocacy services, and uses data, technology and analysis to plan and complete the insurance of the entire cargo, and there has been no refusal or inability to arrange cargo insurance.
  • Raise awareness and actions to prevent damage:
    We will continue to pay attention to climate change factors, enhance the awareness and response actions of damage prevention and obstruction in all warehousing centers and import and export cargo operations, and fully cooperate with insurance companies to put forward improvement suggestions to facilitate the risk assessment of insurance brokers and insurance companies, so as to secure the Group's annual insurance arrangements.
  • Focus on cost-effectiveness and strive for premium returns:
    We will continue to pay attention to the impact of premium increases and dilution of profits, strengthen product sales portfolios and optimize inventory management, conduct cost-benefit analysis, and include insurance costs in the assessment, strengthen damage prevention actions, strive to reduce the risk rate (especially transportation insurance), and strive for a premium refund mechanism under a certain loss rate from insurance companies.

Medium and long-term:
  • We will continue to rely on professional insurance brokers to use data, technology and analysis to arrange Group’s insurance planning, maintain good communication with insurance companies, and adopt damage prevention suggestions, to enhance the company's resilience, assess the suitability of its operating base, and avoid the possibility of insurance refusal.
  • The product structure should be adjusted in a timely manner to maintain the profitability and scale of operation of each product line to help absorb the increase in insurance costs and maintain the overall profitability performance of the company.
Note:
  • According to the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) scenarios analysis outcomes, by adopting the existing policy simulation for 2020 (CAT current policies scenario), the increase in average economic losses caused by typhoons and floods compared with the base year 2015 are summarized as below:
    Taiwan：Typhoon 2025 2%；2030 2.9%；2055 8%；Flood 2025、2030 negative growth rate；2055 10.9%。
    Hong Kong：Typhoon 2025 2.5%；2030 3.8% (long term up to 14% increase)；No data on flood。
    China：Flood 2025 15%；2030 20.3%；2055 52.8%。
    US：Flood 2025 23.9%；2030 32.1%；2055 20.7%。
    Germany：Flood 2025 21.7%； 2030 26.4%；2055 85.5%。