First Financial Holding's Board of Directors is the highest governing body for the Group's climate-related risks; it is responsible for approving, guiding, and ensuring the effective operation of risk management policies. Under the supervision of the Board of Directors, the Sustainable Development Committee and Risk Management Committee are responsible for supervising the group's key climate strategies.It uses the "Climate-Related Financial Disclosures Recommendations published by the Task Force on Climate-Related Financial Disclosures (TCFD) to check and identify the operation risks and opportunities of the Company due to physical, transformation aspects. It shall establish a materiality of risks and possibility of opportunity matrix and use the outcomes of the matrix analysis to establish risk management strategy regarding the major risks as the core response action to the climate change accordingly.

In 2020, the board of directors reviewed and approved the incorporation of emerging risks including climate change risks into the risk management policy, and submitted the climate change risk assessment result, its mitigation measures and implementation status to the board of directors in 2021. The bank's subsidiaries also invited independent directors to the Risk Management Committee to provide guidance in September 2021 to effectively supervise various climate governance actions from top to bottom.In August 2022, First Financial Holdings officially joined the Partnership for Carbon Accounting Financials (PCAF) and complied with the PCAF's recommended methodology to conduct scope 3 financial carbon emissions inventory of financing and investments. In November, First Financial Holdings also joined the Science Based Target initiative (SBTi) to take inventory of carbon emissions from own operations as well as financing and investment positions. Net zero thinking is consistently included into processes for investment and financing decisions to decrease the weight of investments and financing in high pollution and high emission sectors to achieve Taiwan's commitment to net zero.

The Group's climate scenarios comply with the "Plan for Domestic Banks to Perform Climate Change Scenario Analysis Operations" ("operation plan") announced by the competent authority in combination with scenario data from the NGFS (The Network for Greening the Financial System) and IPCC AR5. Three climate scenario simulations (orderly transition, disorderly transition, no policy) were established for two points in time (2030, 2050) to perform climate risk scenario analysis, as explained in the following:

With reference to the "operation plan" of climate change scenario analysis provided by the Financial Supervisory Commission, the base climate change scenario analysis was conducted to gradually define climate hazard impact factors and identifying financial elements linked to climate in the positions of each business division. Credit risk was then calculated for each position based on climate change scenarios to obtain the following calculations: