Coway's highest decision-making body is the Board of Directors. Within the Board, there is an ESG Committee where all decisions relating to sustainability management, including climate change adaptation, are taken.

In particular, climate change adaptation is discussed by the Environment Sub- consultative group within the ESG Consultative Group. This sub-consultative group includes the head of the organization and the person responsible for climate change adaptation at each department/division.

The strategy for the climate change adaptation is led by the IR team and the Environmental Safety and Certification team of the TQA division, and other departments included in working groups to carry out tasks related to risk and opportunity areas. The results of the tasks and action plans are shared and reported to the ESG consultative group four times a year. Some of the climate change adaptation tasks presented at the last ESG Consultative Group have been placed on the agenda of the ESG Committee and the final decision has been made by the Board of Directors.

Climate change adaptation will impact all industries and create various business risks and opportunities in the future. Due to the impact of climate change adaptation on the economy, there has been growing demand from stakeholders for the disclosure of climate change adaptation-related information. Although Coway has not declared its support for the Task Force on Climate-related Financial Disclosures (TCFD), the company plans to gradually disclose its advanced strategy to address the climate change adaptation risks Coway may face, in line with recommendations from the TCFD disclosure framework (governance, strategy, risk management, indicators and reduction targets). This will enable investors to better understand Coway's climate change adaptation and contribute towards transitioning to a carbon neutrality society.

Coway has conducted a scenario analysis of Coway's climate change adaptation based on the Nationally Determined Contribution (NDC) and the IPCC's Fifth Assessment Report and made assessments. In addition, Coway will gradually update scenario analysis in light of the recent IPCC Sixth Assessment Report and disclose its strategy for addressing climate change adaptation based on the results of the scenario analysis in accordance with the TCFD framework.

Coway categorizes risks from climate change adaptation into physical and transition risks. Physical risks include the impacts of extreme weather, such as droughts and floods, and global warming. Transition risks include changes in policy, in the supply chain and market demand in the process of transitioning to a carbon neutrality society.

Coway is reviewing the risks from climate change adaptation on a scenario basis, focusing on business impacts, and establishing strategies to address potential impacts and financial impacts from short-term, mid-term, and long-term perspectives.

As a result of analyzing the impacts of acute and chronic risks caused by climate change adaptation, the impacts of physical risks including typhoons, heavy rains, floods, forest fires, and heat waves. Accordingly, for risks with medium- to long-term impacts, such as heavy rains and floods, it was confirmed that it is necessary to establish and operate a disaster management process including disaster recovery in the event of a natural disaster, and to operate risk assessment to identify, evaluate, and eliminate risk factors in the workplace to prevent major disasters in terms of safety and health management.

Climate change adaptation can be a risk factor, but it can also play a strategic opportunity in ways such as transforming businesses. Coway has analyzed the impact of climate change adaptation opportunities. We intend to contribute towards improving resource circulation by establishing a waste recovery and recycling system and a resource cycle ecosystem. We also expect to reduce operating costs, including the cost of purchasing energy, meet renewable energy conversion targets to achieve carbon neutrality, and ensure competitiveness in a carbon neutrality industrial structure.

Coway is developing a detailed strategy to promote climate adaptation, incorporating resilience into organizational strategies across the company and moving away from the company's past site-focused climate change adaptation.

Coway's climate change adaptation risk management is conducted as a business risk management process to respond to changes in the external business environment. In climate change adaptation risk management, the IR Team of ESG division leads the entire process and operates/manages each process (monitoring, risk analysis, task submission, reporting, and management).

Climate change adaptation risks identified through this process will be reported periodically to the ESG Consultative Group. The financial and non-financial impacts of climate change adaptation that are assessed to be material risks will be reported to the ESG Committee and the Board of Directors.

We aim to join the national effort to fight the climate crisis and reduce carbon emissions in half by 2030 to achieve carbon neutrality by 2050. To this end, Coway has decided to invest in renewable energy such as building solar power plants and transition to low-carbon energy as a climate adaptation scenario-based promotion strategy. We will continue to invest in solar installations and expand our power plant operations, which will help us meet our 2030 and 2050 carbon emission reduction targets.

We have anticipated climate change adaptation scenarios related to our products and decided to develop new and alternative technologies as a promotion strategy based on climate adaptation scenarios and expand their application. Specifically, by 2025, we will expand the application of refrigerant-free refrigeration technology for our domestically supplied products, confirm the replacement of existing refrigerants with eco-friendly refrigerants as a strategy based on climate adaptation scenarios, and invest in new and alternative technologies to achieve our greenhouse gas emission reduction targets.

Additionally, we plan to predict climate adaptation scenarios related to areas connected to Coway's business (supply chain/affiliates, logistics, service managers, and leased buildings) and apply detailed implementation strategies.

Recently, the government announced a “plan to expand the use of eco-friendly vehicles” as part of its strategy to achieve the 2050 NDC target. The “Act on the Promotion of the Development and Distribution of Environment-Friendly Automobiles” was enacted to require private sector companies with a large number of vehicles to set a target for the purchase of green vehicles each year when purchasing or leasing new vehicles, and to verify that the target is being met through performance checks.

As Coway falls under Enforcement Decree No. 5 of the Act (Disclosure Group), Coway is establishing purchase/lease targets for mid- to long-term eco-friendly vehicle conversion for business vehicles. We will report our annual performance on this through our management organization, the Korea Energy Agency.

Coway will therefore progressively disseminate climate adaptation scenarios and implementation strategies that minimize the impact of climate change adaptation across its relevant business areas and take the lead in climate change adaptation on a global scale.

The financial and non-financial risks posed by climate change adaptation are driving major changes in industrial activities worldwide and demand a transition to a carbon neutrality global community. In line with these changes, Coway has established mid-to-long-term goals to reduce carbon emissions and actively participate in addressing climate change adaptation. We also voluntarily undergo a third-party verification of our carbon emissions every year.

Coway recognized the impact of climate change adaptation on business activities and developed a carbon emissions inventory management system in 2009. A year later, we set the carbon emissions reduction target to be achieved by 2020 and met the target. Based on the IPCC special report on the impacts of global warming of 1.5 °C above pre-industrial levels published in 2018, we have set our new mid- and long-term targets for carbon emissions by 2030, 2040, and 2050 (mid- and long- term). We are also preparing a climate change adaptation plan to achieve carbon neutrality by 2050. We will continue making investments in renewable energy and achieve energy efficiency in the workplace to reduce carbon emissions across all Coway factories.

Coway has quantified and disclosed detailed mid- and long-term carbon emissions reduction targets. The mid-term target is a 50% reduction in carbon emissions by 2030 based on carbon emissions in 2020, followed by a 75% reduction by 2040, and a 100% reduction by 2050.

Coway is committed to fulfilling its goals for reducing carbon emissions and energy consumption in each factory. Above all, we are replacing part of the energy we use in the factories with solar energy and building a renewable energy network, joining efforts to reduce carbon emissions at the national level. We have been operating solar power plants that utilize the facilities available in manufacturing plants, logistics centers, and other relevant bodies to offset carbon emissions. We will continue working hard to achieve carbon neutrality by participating in third-party Power Purchase Agreements (PPAs) and achieving carbon neutrality throughout the supply chain, among others.

Coway currently measures and discloses carbon emissions in the Scope 3 area of employee commuter buses. However, as the global trend of disclosing information in all Scope 3 areas continues, Coway is gradually unfurling a response plan. By 2025, we plan to establish a system to monitor and manage carbon emissions in all Scope 3 areas (leased buildings, outsourced logistics operations, employee travel, affiliates (subsidiaries), and suppliers).

The most important strategy for achieving Coway's mid- to long-term carbon emission reduction goals is the transition towards and investments in renewable energy (solar power). Coway relies on electricity for most of its energy sources and plans to offset our carbon emissions by building a renewable energy (solar) power generation facility to cover the increase in energy usage due to continued business growth.

Coway has been investing in the construction of solar power plants since 2020 to transition to renewable energy, with the goal of reducing carbon emissions by 50% by 2030 and reaching zero by 2050. Solar power plant No. 001 began generating electricity in September 2022, and solar power plant No. 002 began generating electricity at the end of March 2023. In addition, more solar power facilities are needed to meet the goal of reducing carbon emissions by 50% by 2030. The investment plan is to sequentially build solar power generation facilities that are approximately 800~1000kwh in scale by 2030. However, the construction of additional solar power plants may change from time to time due to the need to secure investment conditions such as available funding, buildable land, and permits/approvals. But we will make every effort to achieve the goal of reducing carbon emissions by 50% by 2030 by proactively securing funding and land.

Coway has been continuously introducing new and renewable energy, starting with the construction of a solar power plant facility at the Pocheon Plant in 2013. As of 2022, Coway produces and operates renewable energy through solar power generation facilities at the Yugu Plant (58 MWh), Incheon Plant (50 MWh), Pocheon Plant (45 MWh), and distribution center (65 MWh). In addition, Coway secured 228 MWh (342 REC) of electricity generation through a separate solar power plant, Solar Power Plant No. 001. The three factories and distribution centers (excluding solar power plant No. 001) generated and consumed about 218 MWh of electricity in 2022, reducing greenhouse gas emissions by about 100 tons. The Energy Storage System (ESS) introduced at the Yugu Plant has reduced peak loads and contributed to the distribution of energy usage.