Chung Hung Steel ESG

Carbon Reduction Target and Management

Carbon Reduction Pathway

CHS's carbon reduction targets (Scope 1 and 2), using 2018 as the base year, and long-term carbon reduction targets and pathways are set as follows:

Short-term: 7% reduction compared to 2018 by 2025.
Short-term: 25% reduction compared to 2018 by 2030.
Medium-term: 50% reduction compared to 2018 by 2040.
Long-term: Achieve carbon neutrality by 2050.

2050年減碳路徑圖如下：

CHS's 2050 Carbon Reduction Pathway

2025 Greenhouse Gas Emission Target: CO₂e emissions ≦ 352,706 metric tons.
2024 greenhouse gas emissions totaled 238,943.691 metric tons, successfully meeting the target (CO₂e emissions ≦ 356,499 metric tons).

2024 Major Energy Conservation and Carbon Reduction Initiatives and Performance

Serial Number	Energy Conservation and Carbon Reduction Initiative	Energy Conservation Achievements		Carbon Reduction Achievements
Serial Number	Energy Conservation and Carbon Reduction Initiative	Electricity consumption (kWh)	GJ	CO₂e(metric tons)
1	Energy-saving efforts have been driven by improving the efficiency of public utility systems (e.g., replacing LED lighting, phasing out old equipment, and upgrading equipment performance, with 33 projects completed).	1,297,032	4,670	614.793
2	Utilization of green electricity (totaling 6,274,531 kWh/year)	-	-	2,974.128

In 2024, the electricity savings from various energy efficiency projects were calculated based on the reporting method used in the Energy Administration's Energy Audit Network Declaration System. The calculations involved theoretical estimates (e.g., differences before and after equipment improvements) and actual electricity consumption measurements (using installed meters).
The carbon emission reduction from energy efficiency projects in 2024 was self-estimated by CHS Corporation. It was calculated using the Energy Administration's electricity carbon emission coefficient of 0.474 kg CO₂e per kWh for the year 2024.
The carbon reduction outcomes for the current year: All fall under Scope 2.

Greenhouse Gas Inventory

CHS sets its organizational boundaries for greenhouse gas inventory according to operational control methods. Global Warming Potential (GWP) values are referenced from the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report (2021 edition), in compliance with the relevant regulatory requirements of the Financial Supervisory Commission's "Sustainable Development Roadmap for Listed Companies." The greenhouse gas inventory results for the past three years are as follows:

Unit: metric tons CO₂e

	Scope 1	Scope 2	Scope 3
ISO 14064-1:2018	Category1	Category2	Category3	Category4	Category5	Category6
2022	142,063.9532	136,398.2775	62,161.4776	4,898,467.9797	Due to the Company's production characteristics falling under category B→B, there are no activities falling under category 5.	-
2023	146,771.5102	130,405.2627	59,160.3220	4,112,780.1530		-
2024	128,052.2297	110,891.4608	47,716.4130	3,390,133.2250		-

The above GHG emissions data has been verified by an independent third party, DNV Business Assurance Co., Ltd. (DNV)—and certified under ISO 14064-1:2018.
Types of greenhouse gases: Carbon dioxide (CO₂), Methane (CH4), Nitrous oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), Sulfur hexafluoride (SF6), Nitrogen trifluoride (NF3).
Definitions of emission sources for ISO 14064-1:2018 categories are as follows:
1. Category 1: Direct Emissions
2. Category 2: Indirect Energy Emissions
3. Category 3: Indirect emissions from transportation (3.1 upstream transportation).
4. Category 4: Indirect emissions from the use of products by the organization (4.1 purchased goods, 4.3 fuel- and energy-related activities, 4.4 waste disposal).
5. Category 5: Emissions from the use of products by the organization.
6. Category 6: Other sources.
Explanation of Scope 2 Emission Calculation Methods:
1. Location-based approach:
  1. Electricity purchased from Taiwan Power Company (Taipower) is calculated using the location-based approach, with the electricity emission factor adopted from the national grid emission factor announced by the Ministry of Economic Affairs.
  2. Steam purchased from China Steel Corporation (CSC) is also calculated using the location-based approach, with the emission factor for steam provided by the supplier (CSC).
2. Market-based approach: Green electricity purchased from CSC Solar Corporation is calculated using the market-based approach.

ISO 14064-1:2018 Verification Statement (2024)

GHG emissions intensity

CHS continues to use low-carbon fuel (natural gas), green electricity, and implements various energy-saving measures (e.g., the “1% Power Saving Project”) while maintaining operations under the ISO 50001 Energy Management System. Although the Company’s GHG emissions declined in 2024, when steel production reached the lowest level in three years (approximately 300,000 metric tons less than in 2023), due to the volatile market, delays in raw material and order deliveries required maintaining furnace temperatures in the reheating furnaces. As a result, natural gas usage persisted, increasing fuel and electricity consumption per metric ton of product. Consequently, GHG emissions intensity in 2024 was the highest in the past three years.

Greenhouse gas emission intensity trend

Unit: CO₂e(metric tons)/metric ton of product (metric tons)

Year	2022	2023	2024
Fuel	0.0672	0.0717	0.0755
Electricity/Purchased Steam	0.0645	0.0637	0.0654
Total Emissions	0.1317	0.1355	0.1408

Carbon Credits Management

Green Manufacturing Process

CHS is committed to process improvement, managing input of raw materials, and effectively utilizing recyclable materials through thorough statistics and calculations. By meticulously controlling resource usage and participating in energy-saving and carbon-reduction activities, CHS promotes green manufacturing processes. These efforts aim to significantly reduce environmental impact.

2024 Process Resource Usage

INPUT Primary Energy Resources and Raw Material Inputs
Energy^*1： Total Energy: 2,939,034 GJ Direct Energy: 2,055,172 GJ Indirect Energy (Non-Renewable Energy): 861,274 GJ Indirect Energy (Renewable Energy): 22,588 GJ Energy Intensity: 1.437 GJ/metric ton of product Direct Energy Intensity: 1.005 GJ/metric ton of product Indirect Energy Intensity: 0.432 GJ/metric ton of Product	Water： Freshwater (tap water): 1,187.96 million mega liters	Primary Raw Materials^2： Flat Steel Billets: 1,489,735.38 metric tons Hydrogen: 576.107 metric tons Nitrogen: 1,011.33 metric tons Chemicals^3: 20,811.34 metric tons Packaging Materials^*4: 1,929.67 metric tons

OUTPUT Environmental Impact
Greenhouse Gas/Air Pollutant Emissions 1.Greenhouse Gas Emissions^5: Greenhouse gases: 238,943.691 metric tons CO₂e/year 2.Air Pollutant Emissions: Total Suspended Particulates (TSP): 2.46 metric tons/year Sulfur Oxides (SOx): 0 metric tons/year^6 Nitrogen Oxides (NOx): 72.66 metric tons/year Volatile Organic Compounds (VOCs): 20.32 metric tons/year Hydrogen Chloride (HCl): 0.20 metric tons/year	Wastewater Discharge: Wastewater (discharged to surface water): 313.670 mega liters Pollutant Concentrations in Surface Water Discharge: Chemical Oxygen Demand (COD): 25.02 mg/L Suspended Solids (SS): 3.27 mg/L Oil: 4.7 mg/L Soluble Iron: 0.43 mg/L Wastewater (treated at wastewater treatment factory and discharged to the ocean): 124.630 mega liters	Waste Generation: Total Waste Generated: 74,378.52 metric tons General industrial waste: 57,412.71 metric tons Hazardous industrial waste: 16,965.81 metric tons (including 16,965.53 metric tons of waste acid, accounting for 99.99%)

RECYCLE and By-products
Wastewater (including process water) Recycling: Recycled wastewater (including process water): 66,402.429 mega liters Total wastewater: 66,723.752 mega liters Recycling rate: 99.52% (Formula: Recycled amount ÷ Total wastewater amount)	By-products^*7: Iron oxide powder: 3,550 metric tons Regenerated Acid: 20,799 cubic meters

Note:

Energy includes:
1. Direct Energy: Natural gas, liquefied petroleum gas, diesel, gasoline, etc.
2. Indirect Energy (Non-Renewable Energy): Purchased electricity (Taiwan Power Company), purchased steam (provided by China Steel Corporation), etc.
3. Indirect Energy (Renewable Energy): Purchased electricity (green electricity)
4. Emission Factors: 1 calorie = 4.1868 joules, 1 kilowatt-hour = 3,600,000 joules, 1 metric ton of steam = 2,972,628,000 joules (provided by China Steel Corporation).
In 2024, the primary raw materials were all non-renewable.
Chemicals include:
1. Production Process: Rolling oil, hydraulic oil, hydrochloric acid, alkali powder, tempering oil, anti-rust oil, varnish, UV paint, etc.
2. Utilities and Wastewater: Sulfuric acid, caustic soda, lime, etc.
Packaging materials primarily consist of iron straps, iron buckles, iron sheets, iron sleeves, and anti-rust wrapping paper.
Greenhouse gas emissions include Scope 1 and Scope 2 emissions. Additionally, the Company has no production, import, or export of ozone-depleting substances (ODS).
The total sulfur oxide emissions from the Company's Pipe & Tube Department amount to 0.01 kg.
The cold rolling department and pickling & galvanizing department produce waste pickling solution, which is sent to the pickling & galvanizing factory's ARP (Acid Regeneration factory) for regeneration, resulting in by-products of regenerated acid and iron oxide powder.

Promoting Green Living

In alignment with China Steel Corporation's policies, CHS has established the "Green Living Promotion and Assessment Measures," which implement activities promoting green living across various aspects of daily life including food, clothing, housing, transportation, leisure, and other aspects. These activities encompass initiatives such as incentives for folding uniforms, options for interchangeable clothing, reducing clothing waste, switching from bottled to bulk water at large events, promoting carpooling for official vehicles, recycling single-sided paper, encouraging video conferences, donating old clothes, and recycling old fabrics. CHS actively participates in the group's green living assessments to foster a sustainable lifestyle.

Pollution Prevention

CHS conducts inspections and reports in compliance with regulations, and promotes various pollution prevention actions based on the types of pollution sources, aiming to reduce environmental impact. The actions are described as follows:

Air Pollution Control

The air pollutants generated by CHS primarily include Total Suspended Particulates (TSP), Nitrogen Oxides (NO_X), Sulfur Oxides (SO_X), and Volatile Organic Compounds (VOC_S). These pollutants are annually inspected and reported as per regulatory requirements. In addition to controlling operating parameters and reducing VOC content, each equipment unit is operated according to standard operating procedures, and pollution control devices are operated stably. Combustion equipment (e.g., heating furnaces, annealing furnaces, boilers) uses clean fuel (natural gas), resulting in stable and minimal changes in the emissions of TSP, NOx, and SOx. Additionally, the total emissions of air pollutants are significantly below the regulatory emission standards. The trends in the emission intensity of various air pollutants over the past three years are as follows:

2024 Air Pollutant Emissions

Unit: Kilograms

Items	Particulate Matter	Sulfur Oxides	Nitrogen Oxides	Volatile Organic Compounds
Hot Rolling Department	2,244	0	60,195	1,314
Cold Rolling Department	178	0	10,185	906
Pickling & Galvanizing Department	33	0	2,276	363
Pipe & Tube Department Da Fa Industrial Zone	0.04	0.01	0.23	14,218
Pipe & Tube Department Lukang Industrial Zone	-	-	-	3,521

Trends in Air Pollutant Emission Intensity Over the Past Three Years

Unit: Pollutant Amount (Kilograms)/Metric Ton of Product

Items	Year	Emission Intensity
Particulate Matter	2022	0.0011
	2023	0.0012
	2024	0.0012
Sulfur Oxides	2022	0.0000
	2023	0.0000
	2024	0.0000
Nitrogen Oxides	2022	0.0430
	2023	0.0385
	2024	0.0355
Volatile Organic Compounds	2022	0.0101
	2023	0.0055
	2024	0.0099

Water Resources and Water Pollution Prevention

To conserve water resources, in addition to rainwater harvesting, the Company also recycles process wastewater from the hot rolling mill, reuses treated effluent from the cold rolling mill in washing towers, recycles wastewater from pure water regeneration, and recirculates process water at the steel pipe mill. Across all plants, mechanical seals of public water pumps have been replaced with wear rings to reduce leakage, and water-saving faucets have been installed as part of improvement measures. In 2024, the wastewater (including process water) recycling rate reached 99.52%. The unit water consumption per product in 2024 was the highest in the past three years, mainly due to low order volumes caused by weak market conditions and the high hardness of tap water affecting product quality, which necessitated additional water discharge and replenishment:

Unit Water Consumption per Product in the Past Three Years

Year	2023	2023	2024
Unit Water Consumption	0.486 kWh/metric tons	0.467 kWh/metric tons	0.580 kWh/metric tons

CHS's wastewater primarily originates from process wastewater and employee domestic sewage. Apart from implementing various measures to reduce process wastewater at its sources, wastewater is also collected and treated separately. The treatment methods and 2024 discharge volumes for each factory are as follows:

Factory Area	2024 Wastewater Discharge Volume	Wastewater Treatment Method and Discharge Location
Hot Rolling Department	188.75 mega liters	After undergoing treatment through the on-site wastewater treatment system, the wastewater is discharged into the bottom branch of the Agongdian Stream once it meets the discharge standards.
Cold Rolling Department	124.92 mega liters	After being treated by the on-site wastewater treatment system and meeting discharge standards, the wastewater is discharged into the Dianbao River.
Pickling & Galvanizing Department	121.08 mega liters	The wastewater from the factory's internal wastewater treatment facility undergoes preliminary treatment before being discharged to the coastal industrial area sewage treatment factory for further processing. Ultimately, it is discharged into the ocean.
Pipe & Tube Department Da Fa Industrial Zone	0.70 mega liters	After undergoing treatment at the Dafa Industrial Park sewage treatment factory, the wastewater is ultimately discharged into the ocean.
Pipe & Tube Department Lukang Industrial Zone	2.85 mega liters	After undergoing treatment at the Changhua Coastal Industrial Park sewage treatment factory, the wastewater is ultimately discharged into the ocean.

Note:
In 2024, wastewater discharged from the hot and cold rolling departments exhibited chemical oxygen demand (COD) of 25.02mg/L (regulatory standard: 100 mg/L) and suspended solids (S.S.) of 3.27mg/L (regulatory standard: 30 mg/L). Levels of heavy metals were minimal and well below regulatory limits. These emissions are compliant with environmental regulations and pose no adverse impact on aquatic biodiversity.

Waste Management

In 2024, CHS processed a total of 74,378.52 metric tons of industrial waste, including 57,412.71 metric tons of general industrial waste (77.19%) and 16,965.81 metric tons of hazardous industrial waste (22.81%). The resource recovery rate was 99.40%, demonstrating the Company’s effective implementation of waste resource utilization policies. Additionally, CHS annually commissions external parties to conduct toxicity characteristic leaching procedure (TCLP) tests on generated waste. Given the high reuse rate, no significant environmental impact on water or land has been identified. Waste treatment methods include as follow:

【General corporate waste】

Predominantly consists of scrap iron, hot rolling sludge, and inorganic sludge. These materials were entrusted to qualified domestic clearance and treatment contractors.

Processing Method	Name of Waste (Waste Code)	Production Volume (in metric tons)	Percentage (%)
Reuse	Hot-rolled sludge (R-1206), scrap iron (R-1301), waste activated carbon (R-2408), waste oil sludge (D-0903), inorganic sludge (D-0902), waste lubricating oil (D-1703), scrap wood (R-0701), waste electrical wires and cables (D-2601), waste bricks (R-0402), waste iron drums (R-1301), waste grinding swarf (D-1399)	56,966.95	99.22
Physical Processing (Intermediate Treatment)	Waste Oil Mixture (D-1799)	14.6	0.02
Landfilling (Final Disposal)	Waste wood and construction debris (D-0599), furnace slag (D-1101), waste grinding sludge (D-1399), waste abrasive wheels (D-2406), waste glass wool (D-0402), waste glass fiber (D-2410), and other mixtures of waste glass, ceramics, bricks, tiles, and clay (D-0499).	135.4	0.24
Incineration (Intermediate Treatment)	Mixed waste plastics (D-0299), waste fiber fabrics (D-0899), and domestic waste (D-1801)	295.76	0.52
Total		57,412.71	100

【Hazardous Business Waste】

In 2024, hazardous waste generated includes spent acid pickling liquor and chromium-containing waste liquids. The spent acid pickling liquor undergoes treatment through the Acid Regeneration factory (ARP) operated by China Steel Corporation and acid plating factories, resulting in regenerated hydrochloric acid reused in the manufacturing process. Chromium-containing waste liquids are managed by accredited domestic contractors for proper disposal and treatment. All hazardous business waste is recycled or treated domestically, with no exportation for disposal, thus accounting for 0% of hazardous waste transported abroad.

Processing Method	Name of Waste (Waste Code)	Production Volume (in metric tons)	Percentage (%)
Reuse	Waste pickling acid (R-2502)	16,965.53	99.998
Chemical treatment (Intermediate Treatment)	Chromium and its compound waste liquid (C-0104)	0.28	0.002
Total		16,965.81	100

【Toxic Chemical Substance Management】

The cold rolling mill uses hydrazine, a Category 4 toxic chemical substance, for which the Company holds the necessary environmental permits issued by the Environmental Protection Bureau. Hydrazine is primarily used as a boiler oxygen scavenger. In 2024, the annual usage volume was 900 kg. The Company complies with regulatory requirements by submitting monthly reports through the Toxic Chemical Substance Registration and Declaration System of the Ministry of Environment. To promote environmental friendliness, the Company began substituting hydrazine with carbohydrazide in October 2024, with full phase-out of hydrazine expected by June 2025.

Environmental Protection

Environmental Expenditure

In 2024, the Company's total environmental expenditures amounted to NT$46.771 million, primarily covering general and hazardous waste treatment, greenhouse gas reduction, and air pollution control. Compared to 2023, environmental expenditures decreased by NT$10.199 million, mainly due to lower production volumes, which led to reductions in air and water pollution fees as well as waste disposal costs.

Environmental Expenditure Over the Past 3 Years

Year	2022	2023	2024
Environmental Expenditure	NT$70,850 thousands	NT$58,392 thousands	NT$46,771 thousands

Breakdown of 2024 Environmental Expenditures

Items	Waste Disposal	Reduction of GHG emissions	Air Pollution Control	Water Pollution Prevention	Others	Total
Ratio	53.72%	19.94%	15.00%	7.28%	4.06%	100%