Task Force on Climate-related Financial Disclosures Index

Governance

The Board will regularly review risks and opportunities related to climate change.

• ESG Steering Committee: TSMC's top organization in climate change management. Chaired by the Chairman of TSMC with the chair of the ESG Committee serving as executive secretary. The Committee reviews TSMC's climate change strategies and goals every quarter and reports to the Board of Directors.
• Energy Saving and Carbon Emission Reduction Committee: The Energy Saving and Carbon Emission Reduction Committee is the Company's management organization for taking action on climate change risk and opportunity. It is chaired by the Senior Vice President of Fab Operations. Every quarter, this Committee formulates management plans, reviews implementation status, and discusses future plans.
• Risk Management Executive Council: The Risk Management Executive Council briefs the Audit Committee each year on the ever-changing risk environment facing TSMC, the focus of the Company's enterprise risk management, and risk assessment and mitigation efforts, including climate change issues.

• The ESG Steering Committee is comprised of senior executives from various TSMC organizations and formulates long-term 2030 goals and development strategies for climate change and renewable energies. In 2021, the Committee announced its commitment to a target of Net Zero Emissions by 2050. See "ESG Management Platform" for more information.
• The executive secretary of the ESG Steering Committee delivered quarterly reports to the Board on sustainable development strategies and achievements, including green manufacturing performance, purchasing renewable energies, and net zero emission targets and strategies, which received the Board’s support.
• The Energy Saving and Carbon Emission Reduction Committee defined five major energy conservation teams based on different process technologies to increase energy conservation for production equipment and fab facilities. To incentivize the energy conservation teams, the Committee rewards them based on their success with energy conservation targets and innovative ideas.
• The Chair of the RM Steering Committee gave an annual report to the Audit Committee on water resources, energy risks, natural disasters, regulations, and other topics related to climate change.

Strategies

Planned and carried out 499 energy-saving measures across 8 major categories, saving an additional 700GWh in 2021. See "Increase Energy Efficiency" of 2021 Sustainability report for more information.

See "Climate Change Risk and Opportunity Matrix" of 2021 Sustainability report for more information on how response measures were formulated and enforced according to interdepartmental discussions on climate risks and opportunities.

See "TSMC TCFD Report" for more information on how TSMC completed a qualitative assessment on the financial impact of major climate risk and opportunities and implemented quantitative assessment on the financial impact of major climate risk and opportunities.

Based on the SSP1-1.9 scenario set forth by the Intergovernmental Panel on Climate Change (IPCC) in the IPCC AR6, TSMC the committee analyzed climate risks in production & operation processes and formulated mitigation measures and climate change strategies while also striving toward net zero emission targets.

Risk Management

Use the TCFD framework to develop process for identifying climate risks

Evaluate the qualitative and quantitative financial impact of major climate-related risks/opportunities discussed in the TCFD workshop by related departments.

Formulate response measures based on the risks/opportunities identified and prioritized

Reported assessment results of the climate risk/opportunities and response plans to the ESG Committee Chair.

Integrate climate risk identification and assessment in the Enterprise Risk Management (ERM) process

See "6.3 Risk Management" of 2021 Annual report for more information.

Indicators and Targets

Set management metrics related to climate change

Established the following as climate change performance indicators: GHG emissions per unit product, amount of renewable energy purchased, total electricity saved, improved production efficiency, and days of production interruption due to climate disasters. See "Climate and Energy Strategies, Goals, and Outcomes" of 2021 Sustainability report for more information.

Through ISO 14064-1 annual inventory and disclosure of greenhouse gas emissions, review the impact on the company's operations, and assess the risks of Scope 1, 2 and 3 and their mitigation strategies

Based on carbon inventory and evaluation results, the risks of Scope 1 emissions were reduced effectively because of consistent carbon reduction actions; the risks of Scope 2 indirect GHG emissions due to electricity consumption and the risks of Scope 3 due to supplier indirect emissions continue to increase. See "Greenhouse Gases (GHG) Inventory" of 2021 Sustainability report for more information.

Set climate change management targets and review progress and performance

Set climate change and energy management goals for 2030 in accordance with climate change performance indicators for senior executives to regularly review implementation performance. See "Climate and Energy Strategies, Goals, and Outcomes" and "GHG Reduction Best Practices" of 2021 Sustainability report for more information.