GHG Management Regulations

FENC has set its sights on creating the highest value for energy resources and making net zero a reality. To reach its energy and emission reduction targets, the Company has established energy and carbon emission management mechanisms, reducing energy consumption and GHG emissions from its production processes and equipment and implementing low-carbon transition and innovation. In 2025, FENC enacted the GHG Management Regulations as an implementation reference, setting short-, medium- and long-term reduction targets with regular progress tracking. The indicators and targets are reviewed yearly and adjusted as necessary. In addition, FENC production sites conduct annual GHG inventories in accordance with ISO 14064-1:2018 or the Greenhouse Gas Protocol (GHG Protocol). Scope 3 emissions are inventoried based on the principle of materiality and classified into the 15 categories in the GHG Protocol, including purchased goods and services, fuel- and energy-related activities, upstream and downstream transportation and employee commuting. Since 2023, emission data have undergone annual third-party verification to guarantee data integrity and credibility, which exemplifies FENC’s rigorous approach and unwavering commitment to ongoing improvement of GHG management.

Establishment of GHG Management Systems and Protocols
 

Implementation of Internal Carbon Pricing System

FENC has established an internal carbon pricing system to accelerate carbon reduction within the Company. The system is established based on international studies, such as the International Energy Agency’s World Energy Outlook and the World Bank's annual State and Trends of Carbon Pricing Reports. Considerations also include the internal and external carbon costs at FENC’s worldwide locations as well as analyses conducted over the industry's pricing methods, instruments and strategies. The pricing has been finalized at NT$1,500/tCO₂e in developed economies and NT$1,000/tCO₂e in emerging economies. The internal carbon pricing system was formally implemented in 2024 after being presented to the Board. FENC adopts the Shadow Price method for internal carbon pricing, covering Scope 1 and Scope 2 GHG emissions, and the system encompasses two implementation approaches:

1. The system acts as an incentive for carbon reduction when evaluating the carbon benefits of energy and emission reduction projects.
2. The system serves as a reference during decision-making when calculating the carbon cost of each Business for the monthly management report.

The goals of implementing internal carbon pricing across FENC are as follows:

1. Drive energy efficiency.
2. Drive low-carbon investment.
3. Stress test investments.
4. Identify and seize low-carbon opportunities. 

The internal carbon pricing system applies to all business decision-making processes. It is reflected in the review of 2025 implementation that all units have incorporated carbon costs into equipment investment and process modification decisions, which led to the prioritized implementation of high-efficiency carbon reduction projects.

GHG Management Authority: Energy Task Force

Measurement Methodology, Input and Assumption for GHG Emissions

The organizational boundaries of all FENC production sites are based on operational control with the emission factor method as the measurement methodology, which quantifies emissions by utilizing inputs and assumptions such as activity data, emission factors and the global warming potential (GWP) values. Specifically, emission factors for various sources are referenced from the latest updates published by local authorities. The electricity carbon emission factors for purchased or consumed power from public utilities are based on the most recent announcements available during the inventory period. GWP values are cited from IPCC’s AR6, with exceptions for certain production sites in Taiwan and Japan based on the specific needs of intended users.

The measurement of scope 3 emissions at FENC largely follows the methodologies and covers all categories of emission sources defined by the GHG Protocol. With the activity-based method as the primary measurement methodology, FENC makes emission estimates based on actual activity data and applicable emission factors. Due to the limited availability of certain data, it is difficult to obtain full activity data concerning capital goods and leased assets. The measurement is thus supplemented with the spend-based or asset-specific methods through a hybrid approach to enhance data integrity and consistency of FENC’s GHG inventory. The estimation is based on verifiable information reasonably available as of the reporting date.

GHG Emissions in 2025

Direct and Energy Indirect GHG Emissions per Unit of Production

Unit: tCO₂e / metric ton of production

↪More information:  溫室氣體排放量（範疇一~三）

In 2025, total direct and energy indirect GHG emissions from scopes 1 and 2 went down by 9% compared with the previous year. Lower production and higher renewable energy usage were the main factors behind the decrease. A slight uptick in GHG emissions per unit of production was observed at the Textile Business due to adjustments in the product mix. However, the mild increase was offset by a higher percentage of renewable energy consumption at the Polyester Business. Therefore, the overall GHG emissions remained leveled, which is the result of FENC’s persistent efforts in implementing low-carbon production while increasing energy efficiency and the use of renewable energy. 

During the reporting year, FENC did not engage in any GHG removal activities within its own operations or across the value chain, nor did it purchase or retire any carbon credits. FIGP reduced its indirect GHG emissions related to electricity consumption by purchasing 91,800 MWh of CO₂-free electricity certificates from Chubu Electric Power during the year, aiming at supporting the use of renewable energy and carbon reduction efforts in Japan. The disclosures of FENC’s GHG inventory and reduction are based on actual emissions from its own operational activities. Those from external offset mechanisms are excluded. 

Impact Assessment on the Workforce Structure During Low-carbon Transition

FENC’s pursuit of sustainable operations and low-carbon transition is guided by the principle of just transition. The Company makes sure that measures implemented during the transition pose no adverse impacts on employees while ensuring inclusion and equality across organizational operations. During the reporting year, FENC’s carbon reduction initiatives did not result in significant changes in its workforce structure, nor did climate-related decisions lead to any layoffs, reassignments or the creation of temporary positions. The new hires are recruited due to open positions or labor demands rather than climate-driven restructuring. All recruitment practices at FENC are open, transparent and governed by gender equality to guarantee equal and fair opportunities for all candidates.

To empower employees with skills matching future requirements for net-zero transition, FENC is upskilling employees, enhancing their professional capabilities through its career development systems and training resources. Learning opportunities are accessible and suited for employees of all genders and backgrounds, helping them grow steadily while the Company develops sustainably. Additionally, activities for transition or adaptation purposes at FENC’s operation and production sites pose no actual or potential impacts on local communities or the indigenous peoples. Detailed information on recruitment and training are provided in Recruitment and Retention and Talent Development.

Avid Support for Governmental Policies

1. Climate Change Response Act, Taiwan
   On February 15, 2023, the Climate Change Response Act was promulgated in Taiwan. The law stipulates the levying of carbon fees as one of the policies to thrust Taiwan towards net zero by 2050. In August 2024, three delegated regulations governing the carbon fee system were announced. FENC production sites in Taiwan have submitted voluntary reduction plans to the authorities to apply for a preferential rate. As of December 2025, the plans had passed the committee review, currently pending the written approval of the Ministry of Environment.
2. Decree 06/2022/ND-CP Regulations on Reduction of Greenhouse Gas Emissions and Protection of the Ozone Layer, Vietnam
   In 2022, Vietnam enacted Decree 06/2022/ND-CP, which governs the reduction of GHG emissions, protection of the ozone layer and development of the carbon market. FEPV is among the enterprises on the control list and must start submitting a GHG inventory report biennially starting from 2024, and on March 28, 2025, FEPV submitted the report to the Department of Industry and Trade of Bình Dương Province. Enterprises on the control list are also required to submit a GHG reduction plan covering the period between 2026 and 2030, and starting on March 31, 2027, the annual submission of a GHG reduction report is required.
3. Interim Regulations for the Management of Carbon Emission Trading and the carbon quota provisions under Trial Measures for Shanghai Municipality on Carbon Emission Management, mainland China
   On May 1, 2024, the Interim Regulations for the Management of Carbon Emission Trading, which governs the national carbon trading system in mainland China, went into effect. FEIS, though currently not considered as being within the polyester industry, is within the demonstration zone for the carbon emission trading pilot program. The plant ensures compliance with governmental mandates through various emission reduction projects and control measures with annual energy and carbon reduction targets established at the end of each year. Monthly meetings are held to track and review energy consumption and carbon emissions with proposals for improvement measures and the designation of departments responsible for implementation. FEIS also established the carbon emission management team, carbon trading decision-making team, carbon trading capital trading team and carbon trading confirmation team to track the daily fluctuation of carbon pricing, and present the report at the monthly energy conservation meetings to monitor the entire carbon trading process.
    

Carbon Quotas and Emissions of FEIS

Unit: ktCO₂e

Value Chain Collaboration

1. Carbon Reduction Alliance with Value Chain Partners
   The carbon reduction targets submitted by FENC’s Textile Business has been validated by the Science Based Targets initiative (SBTi), placing FENC among the ranks of textile enterprises with science-based decarbonization commitments. The Textile Business’s setting carbon reduction targets was inspired by an invitation from Nike to participate in the Manufacturers Climate Action Program, an initiative led by the Sustainable Apparel Coalition, which entails the establishment of systematic targets covering scopes 1, 2 and 3 emissions based on international methodologies. After inventorying data, recalibrating targets and undergoing review by international bodies, the targets were approved in June 2025. The carbon reduction targets submitted by the Polyester Business and OTIZ have also been approved by SBTi, making FENC the world’s first polyester enterprise whose targets were validated under the 1.5°C pathway, joining the collective global pursuit of net-zero emissions.
2. Regular Tracking of Carbon Reduction Performance by Brand Customers
   FENC conducts life cycle assessment (LCA) on its primary products to calculate and disclose product carbon footprints, which serve as references for downstream customers in procurement and product design and guide the market towards low-carbon choices. In 2025, FENC completed the update and third-party verification of the carbon footprints for solid-state PET chips, meeting the requirements of ISO 14067 for the carbon footprint of products. Details on additional products with completed LCA are provided in Honing Product Management. To continue reducing product carbon footprints, FENC has implemented recycling solutions that promote full circularity, phasing in recycled and biomass materials to address and satisfy the demand for low-carbon and sustainable products from customers across the value chain. Additionally, FENC is an active participant on sustainability platforms such as CDP, EcoVadis and those established by its brand customers, regularly reporting the targets and implementation progress of GHG reduction. The Textile Business, for instance, reports energy consumption and GHG emission data monthly according to the requirements of major brand customers, such as Nike and adidas, and establishes carbon reduction strategies based on the data. Each quarter, target achievement is reviewed and verified, ensuring that tracking, management and verification mechanisms for carbon reduction are fully and effectively implemented.

Participating in Climate Change Initiatives and Associations

As a member of the Center for Corporate Sustainability, FENC dedicates ongoing efforts to strengthening climate governance by participating in its climate change and sustainable development initiatives and exchange, striving towards low-carbon transition and sustainability transformation through concerted action with industry, government and academia. Details on FENC’s participation in additional climate-related industry associations and initiatives are provided in the section, Green Initiatives, under Green Products-Product Certification.