Biodiversity

Taskforce on Nature-related Financial Disclosures

CSC adopted the LEAP (Locate, Evaluate, Assess, Prepare) methodology recommended by the Taskforce on Nature-relate Financial Disclosures (TNFD) as the core framework for assessing nature-related dependencies and impacts.
Using the LEAP approach, CSC identified dependencies and impacts between its operational activities and key natural resources such as water, biodiversity, air quality, and soil. Based on this evaluation, significant risks and opportunities were identified to support the development of relevant management strategies and sustainability disclosures.

Locate

CSC followed the Additional Sector Guidance - Metals and Mining issued by TNFD to examine the relationship between the steel industry value chain and biodiversity. Using a location-specific approach, CSC identified priority areas that pose potential impacts on or dependencies on nature. Based on these findings, CSC conducted a further assessment of nature-related risks and opportunities, and developed targeted response strategies and performance indicators for the material topics identified.

Scope of Identification

CSC Quarry Processing Yard(Stone Collection and Supply)

  • An important base for stone collection and supply, responsible for the processing and transportation of raw materials such as limestone

CSC Head Office(Production base)

China Steel Building(Administrative Center)

Kaohsiung Park(Adjacent areas to own operations)

  • CSC head office covers ironmaking, steelmaking, hot rolling, cold rolling and other processes, which are highly energy and water intensive.
  • China Steel Building Manage corporate governance structure and operating policies
  • The CSC Group Education Foundation adopted and maintained the Kaohsiung Park within a 2 km area around the CSC head office, providing a place for the company to practice community ecological care

CSC Steel Sdn. Bhd. CSVC(Processing and sales bases)

  • Steel processing and sales base of CSC's investment in overseas. Satisfy global steel market demand through product exports, and undertake upstream materials for reprocessing and application, further extending product life cycle

Identification Results

CSC applied the Biodiversity Risk Filter and Water Risk Filter developed by the World Wide Fund for Nature (WWF) to analyze the risk of the value chain. Based on the cross-comparison of risk results, those locations that fall into the high-risk range of both biodiversity risk and water risk are identified as priority areas.
The Head Office and Quarry Processing Yard are identified as priority areas based on the result of biodiversity risk assessment, while the head office is identified as a priority area based on the result of water risk assessment. Therefore, CSC combined the cross-comparison results and decided to select the head office as the priority area.

Evaluate

Based on the ENCORE framework, CSC identified the primary nature-related dependencies and impact drivers relevant to the steel industry, with the Head Office selected as the priority area for evaluation. A questionnaire survey was then conducted, inviting members of the TNFD task force to assess each driver in terms of business relevance, vulnerability, dependency, and duration of impact.
The results showed that operating activities are highly dependent on water flow regulation, while greenhouse gas emissions have a higher impact on the natural ecosystem.

Assess

Scenario Analysis

CSC used the Guidance on Scenario Analysis published by TNFD to explore the physical risks and transition risks under four scenarios. We invited managers from relevant departments to discuss the company's future strategy direction after analyzing the risks, probability of occurrence and impact of the current operating profile. A total of 16 corresponding major nature-related risks were identified based on the issues that are most relevant to CSC's business operations and the evolving scenarios of nature-related risks.

Identification of Major Nature-related Risks

Based on the results of the scenario analysis, CSC identified the significance of 16 risk topics. Among them, the major risk topics include green finance transformation, international sustainability trends, nature-related laws and policies, regulatory uncertainty, international carbon reduction trends and pressures, and reputational risks.

Green Finance Transformation, Internal Sustainability Trends
1 Sustainability taxonomy and regulations about disclosure requirement increase operational reputation risks
12 Banks/insurance companies are oriented towards green financing, increase operational financial uncertainty
Uncertainty in Nature-related Laws and Policies
2 Financial impact of increasing recycled water usage
3 Financial impact of stricter environmental regulations and natural disclosure
4 Fluctuations in material costs due to changes in environmental trends
5 The transition period for sustainable information disclosure may lead to increased short-term operating costs
6 The lack of breakthrough technologies and unclear energy strategies have led to difficulties in transformation of enterprises in terms of technology and capital investment.
11 Uncertainty about green markets and energy strategies
16 Stricter environmental regulations affect operating costs
International Carbon Reduction Trends and Pressures
7 Carbon reduction pressure increases demand for low-carbon raw materials, increasing raw material and R&D costs
8 Investment in new technology increases operating costs
13 The imposition of carbon fees and the potential for policy changes will lead to increased operating costs, uncertainty, and financial planning risks.
Dependency and Impact of Natural Resources
9 Financial impact of extreme natural disasters
14 Risk of production outages or disruptions due to water shortages
10 Risk of monitor and reduce the hazardous substances and air pollution in the working environment
Reputational Risk
15 Environmental pollution or false news triggers public opinion and affects corporate reputation

Identification of Major Nature-related Opportunities

CSC adopted the SBTN action framework, systematically identifying and responding to natural impacts through the four major actions of “Avoid, Reduce, Regenerate, and Restore". At the same time, CSC used the four steps of ACT-D (Assessment, Transformation, Commitment, and Disclosure) to review the implementation of nature-related opportunities and gradually build internal management and disclosure mechanisms. Through science-based strategic actions and risk scenario analysis, CSC strengthens our resilience to natural risks and actively deploys emerging market opportunities under the green transformation.

Issues
1 The Potential of Green Steel Market
2 Ecological Investigation for Plant Areas
3 Greening Maintenance and Disaster Prevention
4 Investment on Renewable Energy
5 Green Financial and ESG
6 New Material R&D and Adaption
7 Waste Recycling
8 AI Environmental Monitoring
9 Water Recycling Management
10 Campus Environmental Education

Biodiversity Mitigating Actions

To reduce the dependencies and impacts on biodiversity, the following mitigating measures and action plans have been implemented:

Mitigating Measures CSC Actions
Avoid
  • Avoiding development activities near World Heritage Sites and IUCN I-IV protected areas.
  • Since 2021, CSC has fully ceased the use of coal-fired boilers in its power plants to reduce air pollution emissions.
Reduce
  • Shore power systems have been installed at docks to allow ships to switch to electric power upon docking, reducing air pollution from fuel combustion.
  • CSC has proactively scheduled process reduction and equipment maintenance during autumn and winter to improve air quality.
  • CSC has implemented a diversified water resource policy by introducing the urban sewage reclaimed water and promoting wastewater recycling to reduce reliance on a single water source
    (For more details: Water Resource Management)
  • CSC has promoted circular economy to minimize environmental impacts from generation of process waste
    (For more details: Circular Economy, Waste Recycling, Recycling Management of By-products)
Regenerate
  • CSC has established "Environmental Greening Management Operation Standards" to regulate the application process for new tree planting or transplantation in the surrounding areas when conducting various engineering projects within the mill. After the approval is granted by the Vice President of the supervising division, professional contractors are commissioned to carry out tree transplantation to ensure the survival rates of trees.
  • Habitats contributing to biodiversity have been created by planting vegetation that attracts butterflies and birds.
Restore
  • CSC has adopted and maintained plantings in Kaohsiung parks.
  • The CSC Group has organized irregular beach cleaning activities to protect marine environments.
Transform
  • The "Green Life Proposal" competition was held to encourage the creation of low-carbon and green lifestyles within the Group.
  • Green procurement and green consumption have been promoted.
  • CSC has participated in the government-led Water Environment Patrol Team to safeguard water resources.
  • Various activities related to ecological conservation and environmental issues, e.g., summer ecology camps, environmental classrooms, have been organized by the Public Affairs Department and the CSC Group Education Foundation to raise public awareness of ecological conservation. (For more details: CSC Group Education Foundation)

Mid- and High-Level Biodiversity Dependencies and Impacts for CSC

Dependencies Impacts CSC Mitigating Actions
Water Flow Regulation Services Water Supply Water Purification Services GHG Air Pollution Waste Soil/Waste Water Pollution Volume of Water Use
V V For more details: Scrap Recycling (Product Certification)
V V V For more details: Hazardous Substance Management of Products
V V V V For more details: Water Efficiency Management Programs
V V For more details: