Mega Group signed the Task Force on Climate-related Financial Disclosures (TCFD) initiative in April 2020. In accordance with the TCFD framework's four core elements and 11 disclosure items, Mega Securities has articulated its governance, strategies, risk management mechanisms, and metrics and targets adopted in response to climate change issues.
Regarding natural environment issues, we referred to the Taskforce on Nature-related Financial Disclosures (TNFD) framework to analyze the interaction between operating activities and the natural environment. Economic activities were categorized according to the four realms defined by the TNFD land, ocean, freshwater, and atmosphere to explore nature-related risks and opportunities arising from dependencies and impacts.
From a governance perspective, Mega Securities' Board of Directors serves as the highest oversight body for climate- and nature-related matters. Through the Sustainability Development Committee and the Risk Management Committee, the Company coordinates and advances climate- and nature-related initiatives, while incorporating ESG performance into the performance evaluation of management and employees to strengthen accountability for sustainable governance.
From a strategic perspective, Mega Securities aligns its actions with the government's net-zero transition policies and the Group's decarbonization targets by promoting responsible investment, supporting low-carbon transition, and gradually reducing exposure to carbon-intensive industries. Through these efforts, the Company continuously enhances the climate resilience and sustainable value of its investment portfolio.
Furthermore, Mega Securities incorporates climate change, biodiversity, and other environmental risks into its overall risk management framework through a comprehensive process of risk identification, risk assessment, risk response, and risk reporting. The Company continuously monitors and manages climate- and nature-related risks by utilizing tools such as scenario analysis, stress testing, and internal carbon pricing.
In addition, Mega Securities actively advances its sustainability agenda by establishing targets related to greenhouse gas emissions reduction, low-carbon transition of its investment portfolio, and sustainable finance. Through these efforts, the Company works together with its stakeholders to achieve net-zero emissions and promote a sustainable future in which economic development and nature coexist and thrive.
Mega Securities conducts climate scenario analysis annually to determine whether updates to the estimated impacts of climate-related uncertainties and adjustments to business strategies are necessary.
To assess the physical risks faced by investee companies, the Company reviewed its investments in 416 domestic companies (including its wholly owned futures and investment consulting subsidiaries) as of December 31, 2025, with a total investment amount of NT$29.211 billion. The assessment examined potential losses arising from flooding and landslide hazards under the SSP1-2.6 and SSP5-8.5 climate scenarios for 2050, based on the Loss Ratio (LR), defined as the probability of occurrence multiplied by the proportion of potential property impairment. The results indicate that all investee companies are located in areas categorized as having low to moderate climate sensitivity.
Regarding the financial impacts of flood-related hazards, the estimated expected losses under the 2050 SSP1-2.6 and SSP5-8.5 scenarios were approximately NT$134 million and NT$292 million, respectively, representing less than 1% of the total investment portfolio. Accordingly, the potential impact on Mega Securities is considered minimal.
Regarding the financial impacts of landslide-related hazards, the estimated expected losses under the 2050 SSP1-2.6 and SSP5-8.5 scenarios were approximately NT$631 million and NT$742 million, respectively, representing less than 3% of the total investment portfolio. Therefore, the potential impact on Mega Securities is not considered significant.
