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1. Identification of Short, Medium, and Long-Term Climate-Related Risks and Opportunities

Quanta's internal digital TCFD management system collects the impact analysis of each business unit on climate related risks and opportunities, and summarizes them in terms of time of occurrence, impact intensity, likelihood, impact range, etc., and scope are considered to identify short-term (1-3 years), medium-term (3-5 years), and long-term (5 years and beyond) climate-related risks and opportunities faced by Quanta. For Quanta, The physical risk is immediate (extreme rainfall and drought, tropical cyclones as risk) and longterm (change in average rainfall), transition risks originate from regulatory risks (carbon taxes, emissions trading systems, uncertainties in new regulations) and technological risks (demand for low-carbon products and services, investments in new technologies, low-carbon technology transformation). Transition opportunities arise from changes in customer behavior, transportation modes, adaptation solutions, low-carbon energy, and the search for new business opportunities. The following will be divided into two types of risks for explanation:

2. Assessment and Adaptation/Response Measures for Climate-Related Risks and Opportunities

－ Physical Risk

－ Entity Risk and Impact Assessment Matrix Figure

－ Physical Risk Analysis Factors

Physical climate risk is composed of hazard, exposure, and vulnerability. Quanta analyzed the risk values of each site using extreme rainfall as the hazard, extreme rainfall-induced flooding, landslides, and landslides as the vulnerability, and the location of the site as the exposure. When assessing the level of hazard, we considered various combinations of Shared Socioeconomic Pathway (SSP) and Representative Concentration Pathway (RCP), specifically SSP1-RCP2.6, SSP2-RCP4.5, SSP3-RCP7.0, and SSP5-RCP8.5. These combinations were used to estimate the extent of extreme rainfall hazards over different time periods: short-term (2021-2040), medium-term (2041-2060), medium-long term (2061-2080), and long-term (2081-2100). This approach was chosen to avoid excessively extreme simulation results. To analyze vulnerability, we referred to government-issued maps that outline the extent and severity of disasters. Exposure was determined based on the location of Quanta's facilities. Finally, the risk scores of the three vulnerability levels of flooding, landslide, and debris flow were classified into four risk levels of no risk, low risk, medium risk, and high risk according to the risk classification matrix, and the total risk was represented by the level with the highest risk value for the three vulnerability levels.

scenarios (SSP1-RCP2.6, SSP2-RCP4.5, SSP3-RCP7.0, and SSP5-RCP8.5) are considered, and corresponding management measures (maintenance strategy, monitoring strategy, priority monitoring strategy) are implemented based on the water shortage risk faced by each location at different time scales: short-term (2021-2040), medium-term (2041-2060), medium-long term (2061-2080), and long-term (2081-2100).

The baseline comprehensive water resource risks consist of 13 water risks, including: (1) Baseline water pressure1, (2) Baseline water consumption, (3) Annual variation, (4) Seasonal variation, (5) Groundwater level decline, (6) Riverbank flooding risk, (7) Seawater intrusion, (8) Drought risk, (9) Untreated wastewater, (10) Coastal salinization potential, (11) Outdated/no self-supply water facilities, (12) Outdated/no sanitation facilities, (13) National sustainability score. Quanta primarily assesses the risks based on baseline water pressure. They use three estimated scenario matrix combinations (SSP1-RCP2.6, SSP3-RCP7.0, and SSP5-RCP8.5) and three time periods (2030, 2050, 2080) to estimate the risks for four plants (seven assets).

－ Table of Analysis of Physical Risk Results

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－ Entity Risk Adjustment Program

In anticipation of the future long-term water shortage, which poses a substantial physical risk, Quanta has devised emergency plans and implemented risk management measures. These measures encompass the establishment of emergency response procedures to safeguard employee safety and ensure uninterrupted company operations. Additionally, Quanta is exploring the enhancement of its water resource management system and risk management system to mitigate potential risks and minimize losses.

1. Rolling Review: A disaster risk should be conducted annually for all of Quanta's own assets to achieve the goal of risk management.
2. Management Measures: Implementation of Water Resource Management and Daily Water Conservation
3. Emergency Response Plan: Develop emergency response procedures, which include formulating a plan for water shortage emergencies, outlining measures to be taken during water supply interruptions, and ensuring the availability of alternative water sources.
4. Risk Alert System: Establish a risk alert system to receive timely notification of risks and corresponding countermeasures during periods of high rainfall frequency.
5. Employee Training and Awareness Enhancement: Conduct employee training to enhance their awareness of water conservation practices and related skills and encourage everyone to participate in water conservation initiatives.

1. Strengthening Water Recycling: Implement a water recycling system, such as a reclaimed water reuse
2. Reducing reliance on traditional water sources: Development and utilization of alternative water sources, such as rainwater collection systems.
3. Sustainable Water Management Policy: Develop and implement a comprehensive policy for sustainable water management to ensure the long-term and sustainable utilization of water resources.

Transition Risks and Opportunities

－ Transition Risk and Impact Assessment Matrix Figure

－ Transition Opportunity Matrix

－ Financial Impact and the Contingency Measures of Transition Risks and Opportunities

Quanta is committed to constructing and maintaining a complete climate related risk management system and includes the entire group including subsidiaries in its risk management scope. The risk management policy defines the various types of climaterelated risks in accordance with the Quanta's operational policy, and prevents possible losses and optimizes resource allocation in order to reasonably ensure the achievement of the Company's strategic objectives.

－ Identification and Evaluation Process of Climate Related Risks

Quanta follows the TCFD risk disclosure recommendations and collects and summarizes the results of climate related risk and opportunity analysis by each business unit through a digital management system, based on factors such as time of occurrence, impact intensity, likelihood, and impact range, to identify the impact of climate related risks and opportunities, and use them as a basis for formulating response strategies.

－ Climate related risk management process

Quanta has established the "Sustainable Development Steering Committee ”, and its working group conducts short-, medium- and long-term impact assessments and management of climate-related risks every year, and proposes improvement plans for high-risk items. The assessment results and improvement plans are approved by the management representatives of each plant, endorsed by the president, and submitted to the board of directors for approval before being taken forward and implemented. Quanta's board of directors directly provide guidance on the company's strategy for sustainable development, and the "Sustainable Development Center", a special department, is directly responsible to the president's office for making ESG an important guideline for corporate governance.

－ Overall Organizational Process for Identifying and Assessing Climate Risks

Quanta has established the "Risk Management System", which is approved by the Board of Directors, with the President as the convener, to coordinate the promotion and operation of the plan, with the participation and cooperation of all employees. The Sustainability Steering Committee coordinates the possible impact of climaterelated risks on operations or profitability and formulates strategies and proactively communicates with stakeholders of risk events in order to reduce the impact of risk events on the Company's operations and protect the interests of stakeholders.

Quanta has established its own "Risk Management System" and introduced the Climate Related Financial Disclosure (TCFD) and established a working group to identify and evaluate climate related risks in advance. The risk management process is based on five major themes: risk identification, risk measurement, risk monitoring, risk reporting and disclosure, and risk response from four major perspectives: governance, strategy, risk management, and targets. The identification of risks and relative opportunities are reported to the Board of Directors. The Company communicates with all stakeholders to disclose the results of risk identification and management, and discloses risk management information in the annual report, sustainability report. Please refer to the website (quantatw.com) for details.

Metrics and Targets

1.Environmental Management

－ Environmental Management System

Under the influence of global climate change, to pursue global sustainability, Quanta has been focusing on the reduction of production waste from the R&D and design stage, reusing relevant packaging materials as much as possible, and striving to reduce the impact on the overall environment and comply with relevant regulations.

Since 2000, each plant has been implementing ISO 14001 environmental management system and completing the certification. The continuous improvement is promoted through the Plan-Do-Check-Act (P-D-C-A) model.

By identifying the environmental considerations arising from the company's production, activities and services, evaluating the environmental considerations and their environmental impacts, and comparing their severity, we ensure that major potential factors are identified in advance, and that improvement measures and operating procedures are developed to reduce and prevent major potential impacts.

－ Environmental Protection Policy

Quanta Computer is a design and assembly company for professional portable computers, notebooks, motherboards, and other products. The company's main environmental impacts are effluent gas, domestic sewage, and waste materials. Quanta, in holding true to its belief of coexisting with the earth, shall undertake and are committed to the fruition of the following environmental policies to achieve the spirit of pollution prevention and continuous improvement.

(1) Through employee education and the implementation of ISO 14001, employees and those working on behalf of the organization are aware that environmental protection is everyone's responsibility and obligation.

(2) Reduce environmental impact by decreasing both air and water pollution and waste generation.

(3) All products are designed and manufactured in strict compliance with applicable laws and regulations and other requirements that must be observed.

(4) Set environmental goals for continuous improvement.

(5) In achieving low-energy, low-pollution practices, factoring environmental indicators into product design into account.

Metrics and Targets

2.Energy Conservation

－ Energy Use and Management

The company actively implements the ISO 50001:2018 Energy Management System and has established the following policies:

Quanta Computer is a professional design and manufacturing company of portable computers, notebooks, motherboards, servers, and other electronic products. We uphold the belief in coexistence with the Earth and recognize the limited resources of our planet and the importance of sustainable development for our company. Therefore, based on our understanding of energy conservation and carbon reduction, the enhancement of energy efficiency, and fulfilling our corporate social responsibility, we commit to implementing the requirements of the ISO 50001 Energy Management System international standard. We strive to continuously improve energy efficiency, reduce energy consumption in our production or operational activities, establish appropriate energy management performance indicators, and fulfill the following commitments:

(1) Implement an energy management system to meet customer energy requirements

(2) Adhere to energy-related regulations and prioritize the acquisition of energyefficient goods.

(3) Improve energy efficiency and reduce energy waste.。

(4) Implement energy conservation measures to attain corporate social responsibility.

(5) Promote the idea of energy conservation and employ the spirit of energy management.

The Company commits to educating and informing all employees for them to comprehend and adhere to this policy, which may be made available to the public. Currently, the company uses non-renewable energy sources, including gasoline and diesel for company vehicles, natural gas for boilers, liquefied petroleum gas for employee cafeterias, diesel for emergency generators, and purchased electricity. The data sources are based on the 2023 greenhouse gas inventory reports from each plant site, and the calorific value data is obtained from the Energy Bureau's 2015 Energy Product Unit Heat Value Table. The calculation formula is as follows: Energy Consumption = Energy Usage x Energy Heat Value x Energy Unit Conversion.

Types of Energy Consumption

－ Reduction Result

－ Energy Performance Indicators

Metrics and Targets

3.Carbon reduction

－ Greenhouse Gas Emissions

The types of greenhouse gases and the categories of inventory

Quanta's greenhouse gas types include CO2, CH4, N2O, HFCs, PFCs, SF6, and NF3. The main emission sources include natural gas, diesel, gasoline, liquefied petroleum gas, CO2 fire extinguishers, methane from septic tanks, refrigerant leakage, and purchased electricity. Based on historical statistics, the main source of Quanta's greenhouse gas emissions is purchased electricity for operational needs. Excluding other indirect emissions, this emission source accounts for over 90% of the company's total emissions in 2023.

In accordance with ISO 14064-1:2018 and the Greenhouse Gas Inventory Protocol requirements, Quanta has established a greenhouse gas emission inventory and conducts regular annual greenhouse gas emission inventories. Verification statements are obtained to serve as the basis for energy saving and carbon reduction. Quanta actively responds to government policy trends, annually formulates energy-saving and emission reduction measures and targets, and gradually establishes a comprehensive greenhouse gas emission statistical accounting system. The inventory scope includes qualitative and quantitative inventories of Category 1 (direct greenhouse gas emissions) and Category 2 (indirect greenhouse gas emissions from energy sources). Quanta's original base year was 2021, but due to the introduction of SBTi in 2022, the base year has been changed to 2022.

In 2023, Quanta Group actively reduced carbon emissions and supplemented this with the purchase of renewable energy. The four plants used a total of 259,512 MWH of renewable energy in 2023, with a renewable energy usage rate of 27.92%. Under these efforts, compared to category 1+2 in 2022, the carbon emissions reduction reached 51,038 tons, a decrease of 16.09%. The emission intensity per million dollars of revenue dropped from 0.248 to 0.245, continuing conducting energy conservation and carbon emission.

Greenhouse gas emission statistics of 2021-2023

Greenhouse Gas Emission Reduction Target and Achievement

－ Other Energy Conservation and Carbon Reduction Programs

QRDC & QTMC

Replacement of High- Energy-Consuming Air Compressor Equipment

Due to the air compressor CDA being old and having a high failure rate and energy consumption, it has been determined, after evaluation, that the fixed-speed 100HP machine will be replaced with a new 150HP variablefrequency water-cooled air compressor.

Reducing Carbon Emissions from Tanker Truck Transportation

In response to the group's ESG policy, QTMC has switched to using underground pipeline transmission for nitrogen tank supply. This change helps to reduce Scope 3 Category 4 carbon emissions from upstream transportation.

QSMC

Retrofit Refrigeration Pump Frequency

Before renovation: The daily actual electricity consumption multiplied by the number of days equals 3,708 kWh/day multiplied by 360 days, which is equal to 1,334,880 kWh.
After renovation: The daily actual electricity consumption multiplied by the number of days equals 1,219 kWh/day multiplied by 270 days plus 2,368 kWh/day multiplied by 90 days, which is equal to 542,153 kWh.
The energy savings is calculated by subtracting the electricity consumption after renovation from the electricity consumption before renovation, which is equal to 1,334,880 kWh minus 542,153 kWh, resulting in 792,727 kW · h.

Retrofit Cooling Pump Frequency

To optimize the operational status and energy efficiency of the water pump, the average daily electricity consumption before the renovation was 2,880 kW·h. However, after the renovation, it decreased significantly to 788 kW · h. The pump operates for an average of 270 days per year, resulting in an annual energy savings of 564,840 kW · h.

Operation of FFU Speed Reduction in F7 Cleanroom

The energy savings = the pre-speed reduction electricity consumption - the post-speed reduction electricity consumption* the average number of production days per year. The pre-speed reduction average daily electricity consumption is 1,827 kWh (instantaneous electricity consumption on the meter), while the post-speed reduction average daily electricity consumption is 874 kWh (instantaneous electricity consumption on the meter). Therefore, the energy saving amount is calculated as (1,827 - 874) * 312 = 297,336 kW · h.

The TR6 transformer is combined with the TR5 transformer for operation.

The TR6 transformer is used in conjunction with TR5 to meet the load requirements of the production line. The no-load operating current is approximately 14.2 kW · h. It will be decommissioned in March 2023, resulting in an annual energy savings of 16,500 kW · h.

QCMC

P1 Cooling Water Tower Direct Drive Conversion Plan

The cooling tower direct drive transformation involves replacing the original motor, belt, and reducer with a permanent magnet motor, thereby reducing transmission losses. After the replacement, the energy efficiency of the frequency converter and motor has improved, resulting in reduced maintenance costs, such as belts. It is estimated that 156,97 kW · h energy savings will be achieved throughout the year.

Installation of Energy-Saving Device for Phase One Boiler in Residential Area

By utilizing a matching condensing waste heat recovery device and replacing the original energy-saving device with a condenser, modifying the boiler water supply method, and allowing the softened water to pass through the energysaving device and condenser prior to entering the boiler, the exhaust gas energy is effectively recovered. This has resulted in an increase in thermal efficiency from 92.5% to a maximum of approximately 98.2%, leading to reduced natural gas consumption and 399,487 kW·h energy savings throughout the year.

Replacement of High- Efficiency Chilled Water Pumps

By replacing the original chilled water pump with a high efficiency water pump, the new pump incorporates a high efficiency motor and considers factors such as reducing hydraulic losses, maximizing efficiency, and improving cavitation performance. By combining tri-variate flow theory with CFD fluid mechanics calculations, the optimal combination of various flow and geometric parameters is determined to ensure the product's high performance and ultimately achieve energy savings. It is estimated that the annual amount of 339,679 kW · h energy savings will be achieve.

Upgrade the air compressor to Level 2 compression

The air compressor in the plant is being upgraded to a two stage compression system. The two-stage compression compressor cools the high-temperature air after the first stage compression with oil injection, which reduces the intake temperature of the second stage. This results in an almost isothermal compression process, reducing power consumption and theoretically increasing the exhaust volume by up to 8-15%. As a result, approximately 8-15% (5,628,571 kW · h) of energy consumption is saved annually.

Metrics and Targets

4.Water Resource Management

Total water consumption

The QRDC in the Taiwan plant serves as a research and development building, whereas the QTMC is dedicated to production lines and related businesses. Manufacturing operations in the China plant are organized by different production cities. The main source of water is tap water, with no reliance on groundwater, stored rainwater, or surface water. The water is primarily utilized for general daily activities, air conditioning, and kitchen purposes.

To reduce water resource consumption, the management unit conducts annual reviews of water-saving programs and water equipment. The QRDC and QCMC plants use sensor faucets in their restrooms and install water-saving showerheads to control the water flow. The QRDC plant also has a peripheral green belt irrigation system with a rainwater sensor, while the QCMC plant uses manual irrigation to avoid unnecessary water waste. Additionally, the QCMC plant connects the wastewater from the cooling tower to the production line restroom for recycling. In collaboration with Hwa Ya Technology Park Management Consulting Corporation, the QRDC has adopted the upstream detention pond of Nankan Creek from the Taoyuan City Water Resources Bureau to create an ecological park and achieve water resource conservation goals. Furthermore, the QTMC QC3 building is equipped with a rainwater harvesting system, with a capacity of 244.7 cubic meters.

The water withdrawals for each plant area from 2021 to 2023 are shown below:

－ Water withdrawal by plant from 2021 to 2023 (million liters)

Effluent discharge diagram

Volume of effluent water at various sites

－ From 2021 to 2023, the annual water discharge (metric ton) in each plant

－ From 2021 to 2023, the annual water discharge (million liters) in each plant

－ From 2021 to 2023, the annual water consumption (million liters) in each plant

－ Standards and test results of Taiwan plant in 2023

－ QSMC discharge standards and test results in 2023

－ QCMC discharge standards and test results in 2023

－ QMB discharge standards and test results in 2023

Metrics and Targets

5.Management of Industrial Waste

The generation of industrial waste is divided into three major types: general industrial waste, hazardous industrial waste, and resource-based waste. The company produces waste in products, events, or services, with the raw materials including many electronic components and consumables, etc. The production process generates recyclable packaging waste, of which the hazardous waste poses long-term and latent risks. If not properly handled, it will cause varying degrees of secondary pollution damage to water, soil, and air.

Quanta is committed to effective management and continuous achievement of waste reduction, with zero waste as the goal for waste management. Its collection, disposal, and recycling are all conducted in accordance with local regulations and entrusted to qualified waste removal institutions for proper handling, operation, and recording. The company's environmental protection unit conducts irregular inspections of waste disposal plants to ensure that the outsourced processing plants handle waste legally. The proportion of the three types of waste in various plants over the years is shown in the following figure (as shown below).

2021-2023 Waste Statistics

Waste classification based on components (measured in metric tons)

Waste removed from disposal through recycling operations (in metric tons, t)

Waste disposed through final disposal operations (in metric tons, t)

To ensure waste is managed more effectively than required by law, Quanta is gradually implementing a zero-waste landfill plan in various plant sites. This program adopts the Zero Waste to Landfill (UL ECVP 2799) verification. This standard requires that all waste streams within the enterprise undergo compliance management, inspection, and auditing to ensure that waste is properly recycled, reused, and transformed rather than directly landfilled. When the overall waste conversion rate reaches 80% or higher, certification can be obtained. QTMC QC1, QCMC, and QMB have obtained platinum and silver level certifications in 2023.

Compliance with environmental protection regulations

There were no major violations of environmental regulations by Quanta in 2023.

Metrics and Targets

6. Green Products and Green Quality

Green Product Design

Quanta Computer designs and produces environmentally friendly green products to protect the environment and improve people's quality of life. Our green design strategy for products incorporates the concept of sustainable development throughout the entire product lifecycle, including design, production, packaging, transportation, use, and recycling. This involves utilizing eco-friendly materials, implementing energysaving measures, and promoting recycling to minimize the adverse effects of electronic waste on the environment. We also collaborate with our clients to develop products using green design strategies and promote optimized sustainable design solutions.

Green Product Design Strategy

Long-term investment in research and development of green products, as well as the implementation of green design in the following seven aspects:

1. Product material and chemical composition control

To ensure compliance with international chemical regulations and customer-controlled substances requirements, the Quanta Green Design Team and the Management Information Center have each developed the Full Materials Declaration (FMD) system on the CAMP platform. This system serves as a sustainable solution for effectively managing hazardous substances in the electronic product supply chain, facilitating the use of safer materials and chemicals.

Quanta will start implementing FMD for packaging materials, electronic components, plastic parts, and metal parts from September 2022. This will involve providing a detailed list of the material compositions for the finished products. In June 2024, we will fully implement FMD in all parts and materials, thereby enhancing Quanta's and suppliers' material management capabilities. In 2023, a total of 30,584 components successfully passed the FMD Full Material Declaration System review.

2. Compliance with Quanta's Green Standards and Supply Chain Advocacy Regulations

Quanta is actively monitoring international regulatory trends, such as restrictions and timelines for PFAS in different countries, the EU Battery Directive, the EU REACH Substances of Very High Concern (SVHCs), and packaging regulations. These advanced international regulatory requirements serve as the standard specifications for Quanta's product development. All parts and materials used in the design and manufacturing of finished products must comply with the Quanta General Material Specification-Substances Restricted for Use. At the same time, Quanta regularly promotes international laws and its own requirements to the supply chain to enhance their awareness of green products and strengthen their ability to respond to regulatory changes. This not only helps in producing products with reduced environmental impact but also ensures the protection of consumers' health and safety.

3. Establishing a Product Recycling Material Assessment Tool.

The Quanta Design Team conducts regular product life cycle assessments to analyze the recyclability and proportion of recycled materials in our products, as well as their environmental impact. We constantly optimize our production and better the using processes to ensure that our products can be recycled and reused, in accordance with international regulations and design requirements. Quanta adheres to the Waste Electrical and Electronic Equipment Directive (WEEE) and manufactures products that are easily disassembled and recyclable. Quanta conducts compliance assessments and labels its products with the WEEE recycling logo. By 2023, Quanta Computer aims to achieve a recycling and reuse rate of over 80% for all shipped products.

At the same time, we also ensure that our products comply with the recycling labeling and auditing requirements set by the local government. Additionally, some of our production sites have obtained the EU WEEE producer registration qualification and collaborate with qualified local recycling processors. This demonstrates our commitment to fulfilling the obligations and responsibilities of extended producer responsibility in the EU.

4. Improving Energy Efficiency

Quanta's products not only extensively utilize low-power electronic components, but they also implement energy-saving modes and provide energy management solutions. Furthermore, their performance in operation, standby, shutdown, and battery charging and discharging efficiency has been rigorously tested and proven to far exceed international standards. For instance, the Quanta R&D and Design Team proactively addresses the requirements of the European Union's Energy-related Product (ErP) directive.

ErP Lot 6 and Lot 26 (COMMISSION REGULATION (EU) 2023/826):

According to the regulations of ErP Lot 6/26, these devices must meet specific efficiency standards to minimize standby power consumption and energy usage during operation. Testing usually involves measuring the power consumption of the equipment in shutdown, standby, and network standby modes, as well as its efficiency in the rated operating mode.

ErP Lot 3 primarily focuses on regulating computer products, such as desktop computers and notebooks. It aims to enhance the energy efficiency of these products and minimize energy waste. According to the requirements of ErP Lot 3, computer products must comply with specific energy efficiency standards, which are typically measured by their energy consumption in different operating modes.

ErP Lot 9 primarily focuses on regulating servers. According to the requirements of ErP Lot 9, these servers must meet specific efficiency standards to minimize energy waste. Testing usually involves measuring the power consumption of equipment under various loads and operating modes.

5. Expanding the use of sustainable materials

To minimize the production of electronic waste, we have enhanced the utilization of recycled materials starting from the design phase, including incorporating postconsumer recycled plastics (PCR Plastic), ocean-bound plastics (OBP), and postindustrial recycled metal (PIR Metal) in the manufacturing of product components. This approach helps decrease the need for raw materials and encourages material recycling through initiatives like simplified disassembly and plastic material labeling during disposal.

6. Modular Design

Quanta is dedicated to developing durable and easily maintainable modular designs that cater to customers' requirements for self-repair, part replacement, and upgrades, thereby prolonging the lifespan of the product. By promoting the sharing of components and adopting a modular design, we aim to minimize the indirect consumption of resources and materials during the development process.

We consistently invest in innovative, eco-friendly designs, such as our multi-tasking modular computer, the MP8. The product not only holds multiple invention patents but also occupies a prominent position in various environmental sustainability indicators. Currently, we are actively promoting modular design solutions that are relevant to our customers.

• Shared Modular Core Design: The design can be installed in tablet, PC, and AIO enclosures, which enhances product versatility, extends product lifespan, and reduces resource consumption caused by producing multiple different models. This innovative product has been designed to help us achieve our goals of creating an ESG-friendly environment and promoting a circular economy.
• Comprehensive interchangeable performance equipment is available, including 5G, GPU, storage, and I/O components. These components can be replaced as needed, eliminating the need to purchase new products and reducing electronic waste generation by 60%.
• The use of high-quality recyclable plastics and recyclable metals in the modular design of IO leads to a 20% decrease in the carbon footprint of resource extraction.

7. With the advancement of processor performance in server products

The power consumption of the latest generation of CPUs and GPUs has reached unprecedented levels. High-performance servers offer faster computing speeds and higher processing capabilities, but they also generate more heat. As a result, the need for energy-efficient cooling technologies has become increasingly urgent. These technologies are essential to meet the future challenges of higher energy demands and to make a positive contribution to environmental protection.

Quanta is currently engaged in the development and implementation of liquid cooling and air cooling technologies for large server racks and data center products. For instance, the QoolRack liquid cooling rack design can be combined with high-power servers, offering not just flexibility and scalability, but also exceptional heat dissipation performance. This can substantially decrease the power consumption required for cabinet-level cooling, by almost 70%, and greatly enhance the power usage efficiency (PUE) to a reduced level of 1.07.

Green Indicator

Innovation design patents and product sustainability, as well as energy efficiency certification, confirm Quanta Computer's commitment to and success in promoting sustainable design.

(1) Patent Achievements

In 2023, a total of 11 ESG-related patents were granted, demonstrating Quanta's investment and achievements in sustainable design through innovative technology research and development throughout the product life cycle, including design, production, packaging, use, and recycling.

(2) Product Sustainability and Energy Efficiency Certification

Product Sustainability Certification:

During the crucial stage of product research and development, Quanta actively collaborates with customers to adhere to internationally recognized sustainable product certification standards, such as EPEAT, TCO, and TGM. The goal is to improve the environmental friendliness and market competitiveness of the products.

Number of products that obtained sustainable certification in 2023:

• The Electronic Product Environmental Assessment Tool (EPEAT) is a global assessment system for evaluating the environmental attributes of electronic products. The EPEAT environmental certification is considered one of the most stringent product standards worldwide, covering ten key requirements: material management, material selection, lifecycle design, product longevity, energy conservation, end-of-life management, product packaging, lifecycle assessment and carbon footprint, corporate environmental performance, and corporate social responsibility. Its primary objective is to minimize the environmental impact of electronic products throughout their entire lifecycle.
• TCO Sustainable Certification (TCO Certified) promotes sustainability in social and environmental aspects throughout the entire product lifecycle. Its standards encompass product sustainability, socially responsible manufacturing, environmentally responsible manufacturing, user health and safety, product performance, extended product lifespan, reduction of hazardous substances, and material recycling. It places emphasis on the supply chain and the environmental and social responsibilities within the entire IT product lifecycle.
• The Taiwan Green Mark (TGM) is a sustainable product system that was established by the Taiwan Environmental Protection Agency. It aims to reduce environmental pollution, conserve resources, and promote waste reduction and recycling.

With the ongoing development of green certification standards for electronic products, Quanta is dedicated to maintaining its prominent position in the industry and proactively addressing the latest requirements, such as EPEAT Climate+. We have extensively studied the draft requirements of TCO 10 and EPEAT 3.0. We strive to enhance the utilization of renewable energy in our factories, increase the percentage of recycled materials, minimize the use of questionable chemicals, and investigate secure alternative solutions. Our objective is to ensure that our products are not only environmentally friendly but also competitive in the market.

Energy Efficiency Certification:

Quanta is dedicated to improving energy efficiency during the product usage phase by adhering to relevant energy standards such as Energy Star. This is accomplished by offering low power consumption modes and implementing power consumption limits for standby, startup, and sleep modes, thereby achieving an energy-saving design.

Number of energy efficiency certifications obtained in 2023:

• Energy Star: Energy efficiency standards for consumer electroni c products that are set by the U.S. Environmental Protection Ag ency.
• California Appliance Energy Efficiency: The California Energy Commission (CEC) sets energy efficiency certification standards for electrical appliances sold in the California market.
• MEPS (Minimum Energy Performance Standards): Developed and introduced by the governments of New Zealand and Australia. They establish the standards for energy efficiency in products.
• The U.S. Department of Energy's Building Technologies Office (B CS) has recently issued updated energy efficiency requirements for Battery Charger System (BCS) products.
• Korean E-Standby Energy Efficiency: Certification System Establ ished by the Korea Energy Agency (KEA) for Standby Power (E-Standby)
• China Energy Label (CEL): The China Energy Label is a performance indicator that is jointly issued by the National Development and Reform Commission and the General Administration of Quality Supervision, Inspection, and Quarantine. It is designed to provide energy efficiency ratings for products.
• NRCan (Nature Resource Canada) is the government department responsible for establishing energy efficiency requirements for specific product categories imported into Canada.

(3) Expanding the use of sustainable materials

Quanta actively participates in promoting the use of recycled materials, particularly by making significant efforts in the selection of plastic and metal materials.

Quanta primarily uses recycled plastic materials such as PC, PC/ABS, and ABS. These materials are sourced from various channels, including post-consumer recycled (PCR) plastics and ocean waste recovered (OBP) plastics. The proportion of these recycled materials ranges from 30% to 85% and is extensively utilized in various components of the products, including casings, speakers, and fans. This exemplifies Quanta's commitment and endeavors in promoting the use of sustainable materials, addressing global environmental and sustainable development demands, and bolstering the products' competitiveness in the market. It also showcases the company's proactive stance and long-term dedication to environmental protection.

Quanta utilizes 50% to 90% recycled aluminum for metal casings and internal support metal components, as well as 10% recycled steel, to enhance the overall use of recycled metals in its products. This aligns with the concept of circular economy product design. The metal materials used include ADC12RC, AL5052RC, AL6063RC, and BTRC10, surpassing the recycling metal content requirements stated in the draft of the upcoming (2024) version of the U.S. EPEAT 3.0 environmental certification.

(4) Life Cycle Assessment (LCA)

Quanta has adopted the LCA method to improve the environmental impact of its products. This method involves conducting in-depth analysis of comprehensive data throughout the entire lifecycle, including raw material procurement, component manufacturing, production processes, transportation, usage stage, and final recycling and disposal. The analysis focuses on reducing greenhouse gas emissions, energy consumption, and water resources.

Based on all the analysis results, Quanta has proposed specific improvement measures for stages or processes that have a significant impact on the environment. For instance, in the transportation stage, the research and development team has implemented a bulk pack shipping design to decrease the transportation volume per batch of products, enhance the transportation capacity per trip, and minimize the use of packaging materials. This assessment helps us to more effectively identify and manage the environmental impacts of our products. It is also a part of our commitment to continuously improve product environmental performance and reduce our overall environmental footprint and carbon emissions.

Customer Satisfaction

Quanta conducts an annual customer satisfaction survey in the fourth quarter. Each business unit sends questionnaires to their respective customers through the Customer Satisfaction Survey System to proactively gather feedback and use it as a guide for continuous improvement.

According to the 2023 customer satisfaction survey conducted by Quanta Group, the survey focused on quality management and green product control. The percentage of customers who are satisfied with Quanta has slightly increased compared to 2022. When customers provide feedback with suggestions for improvement on the questionnaire items, Quanta will promptly conduct a root cause analysis and develop improvement strategies based on customer opinions. The results of the customer satisfaction survey for each business department will be reviewed at the annual management review meeting. Various survey indicators will be analyzed to identify areas for improvement, providing a reference for enhancing ESG and setting goals for the next year.

Control of toxic and hazardous substances

Quanta follows the ISO 9001:2015 and QC 080000:2017 standards published by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC), respectively, and links the control processes of toxic and hazardous substances in research and development, procurement, manufacturing, and customer service to ensure that all products meet the requirements of being free of harmful substances.

• During the product development stage, suppliers must provide th ird-party testing reports on materials through Quanta's environmental protection website and complete a full material declaration (FMD) and/or restricted substance declaration to meet the requirements for green product control.
• In the manufacturing management process, through risk assessment of the production process and auxiliary materials used, Quanta requires suppliers to provide material declarations for controlled auxiliary materials to ensure compliance with requirements.
• For product control, Quanta conducts sampling and testing of materials, processing materials, and finished products through its own testing laboratory.

Our goal is to ensure that 100% of our shipped products meet customer and regulatory requirements, no violations occurred, as well as customer-specific requirements for green products, with a 100% on-time rate for new product launches.