Material Topics

1. Transition of raw materials
   The increase of demand from the steel
   industry would stimulate the prices of new raw
   materials, leading to the rise of operating
   costs Implementation of carbon fee
   mechanism.
2. Implementation of carbon fee mechanism Products need to bear the cost of carbon emissions, resulting in the increase of
   operating costs.
3. R&D of carbon neutral technology of the steel industry
   Strong demand to develop low carbon,
   emerging steelmaking technologies, leading to
   the increase of the R&D cost.

To address climate change and the trend towards carbon neutrality, the development of low-carbon manufacturing processes, investing in energy-saving, and carbon-reducing R&D projects is imperative, which will affect company profits and product competitiveness.

Occupational safety and health is one of the important components of corporate sustainability. Paying attention to the work safety and health of workers is the responsibility of the company, and it can also get the recognition of employees.

1. suspension and fines It will increase the cost of production.
2. Affect production By improving the manufacture to be safer ，but it may affect product quality or cost.
3. Reputation damaged   It may lead to loss customers.

1. Transition of raw materials
   CSC continues to expand sources of
   alternative materials and prepares for new raw
   materials and resources.
2. Implementation of carbon fee mechanism.
   CSC conducts research on international carbon
   pricing mechanisms to advocate for alignment
   with international, reasonable carbon fee
   systems, thereby mitigating the impact of
   carbon pricing systems.
   CSC continues the development of low carbon,
   emerging steelmaking technologies to reduce
   CSC’s carbon emissions and the carbon fee cost
   of products.
3. R&D of carbon neutral technology of the steel industry.
   CSC actively engages in industry-academia
   collaboration projects and focus on emerging
   low-carbon steelmaking technologies, including
   replacing a portion of iron ores with reduced
   iron, replacing coal injection with hydrogen
   injection, as well as implementing carbon
   capture and other applications.

1. Low-Carbon Blast Furnace
   CSC has planned three main axes for the development of hydrogen metallurgy technology in blast furnaces, including (1) charging low-carbon iron-bearing materials, (2) injecting hydrogen-rich gas, and (3) refining top gas by removing CO₂.
2. Steel-chemical co-production
   By the method of steel-chemical co-production, CSC plans to capture and purify CO and CO2 from by-product gas in steel plants, supplying it to downstream petrochemical industries as raw materials for chemical synthesis.
3. Increased Use of Scrap Steel
   CSC has developed technologies to increase the ratio of scrap steel in the basic oxygen furnace (BOF) process and successfully established technologies such as "BOF heat compensation," "rapid scrap melting," and "secondary refining".

We have follow the three main purpose of work safety, strengthen personnel hazard identification capabilities, deepen inspection levels, implement improvement measures.

1. strengthen personnel hazard identification:
   We offer many courses to educate employees and contractors and to understand occupational hazard and accidents.  ,such as “Basic training on safety management of explosion-proof electrical equipment” and “Training for supervisors in contractor high-hazard operations”.
2. deepen inspection levels:
   During daily inspections, in addition to observing the work process, workers will also be asked about what hazards in this work process and how to prevent them. In the inspection，We also put emphasis on detecting unsafe behavior by workers during the work process.
3. implement improvement measures
   When an accident occurs, the unit that happened accident should immediately find out the cause of the accident and establish preventive measures based on the cause. In the future, in addition to track whether the preventive measures are still implemented or not. We will also review whether the preventive measures can be improved or not.

In addition to the three main purpose of work safety above , we also pay attention to the design of machine and equipment, taking users’ safety into consideration during the design proces.

CSC measures the progress of the material issue by the metric of GHG emissions.
CSC plans carbon reduction pathway and low carbon transition plan with the target of achieving carbon neutral in 2050. setting short- and mid-term targets of reducing carbon emissions by 7% in 2025 and 25% in 2030.

1. CSC expects to complete 28 smart production lines within three years from 2023 to 2025 (76 projects in ten years).
2. To create low-carbon emissions processes and make a profit from the circular carbon economy, CSC has invested “Coproduction of steel and chemicals” project since 2020 and has built up a pilot plant in 2022 with an investment of 20 million Taiwan dollars. CSC expects to supply the CO/CO2 products with 0.24 million ton-CO2e/year in 2030 and 2.9 million ton-CO2e/year in 2040.

1. no fatality
2. FR of employees under 0.18
3. FR of contractors under 0.3

In order to achieve the target of carbon neutral, CSC has planned 10 strategies.

In the short-term, CSC mainly plans to increase the use of renewable energy and step up efforts to improve energy efficiency.

In the mid-term and pathway, CSC will reach the target of reducing carbon emissions in 2030 by "applying reduced iron to BF," "replace coal injection with hydrogen," "co-production between steel and petrochemical plants," and "increasing scrap use."

As for the long-term, there are 4 pathways towards carbon neutrality after 2030, namely electrification, carbon-free fuels, CCS, and full hydrogen smelting process.

In 2023, 223 carbon reduction action plans were completed, achieving a carbon reduction of 358,000 tons/year, a decrease of 1.6% compared with the base year (2018), and the cumulative carbon reduction exceeded 5%, achieving the target.

1. From 2023 till now, CSC has completed 18 smart production lines.
2. CSC has built up a “Coproduction of steel and chemicals” pilot plant in 2022.
3. CSC has set short-, medium-, and long-term carbon reduction targets. With the long-term target of achieving carbon neutrality by 2050, CSC has preliminarily formulated a number of strategies and mapped its pathways towards carbon neutrality. In the short-term, CSC has mainly planned to increase the use of renewable energy and step up efforts to improve energy efficiency. It had completed 221carbon reduction action plans with carbon emissions reduced by 2.8% or 626,000 tons/year in 2022, and 223 carbon reduction action plans with carbon emissions reduced by 1.6% or 358,000 tons/year in 2023, respectively. As for the medium- and long-term pathways towards carbon neutrality, the target of reducing carbon emissions will be reached by 25% in 2030 compared with that in 2018 by applying reduced iron to the blast furnaces, injection of hydrogen-rich gas in the blast furnaces, co-production of steel and petrochemicals, and increasing the use of steel scrap. Four key pathways to achieve carbon neutrality post-2030 have been identified: equipment electrification, carbon-neutral fuel adoption, carbon capture, utilization, and storage (CCUS) implementation, and the development of full hydrogen reduction processes. These pathways encompass carbon mitigation strategies across ten crucial domains.

1. no fatality
2. FR of employees is 0.1
3. FR of contractors is 0.05

Executive committee members' variable compensation is determined using climate change responses as a sustainability measure. The variable compensation of executive committee members is linked to the performance appraisal results of climate change responses.

Executive committee members' variable compensation is determined using innovative research and development as a sustainability measure. The variable compensation of executive committee members is linked to the performance appraisal results of innovative research and development.

Executive committee members' variable compensation is determined using occupational safety and health as a sustainability measure. The variable compensation of executive committee members is linked to the performance appraisal results of occupational safety and health.