ESG

Oneness Biotech recognizes the enormous impact of climate change on the economy, society, and the environment. As one of the leading biotech pharmaceutical companies in Taiwan, we must heed our corporate social responsibility and respond to the challenges brought forth by climate change. In 2021, the Oneness Biotech Risk Management Committee identified climate change as one of the potential risks. To measure and analyze the impact of climate-related risks and to formulate control measures, we adopted the framework from the Task Force on Climate-related Financial Disclosure (TCFD) issued by the Financial Stability Board (FSB). Based on the framework, we disclosed our governance, strategies, risk management and metrics, and targets to help investors and stakeholders understand Oneness Biotech's climate actions.

Governance

The Board of Directors of Oneness Biotech is the highest governance unit to drive sustainable development. Based on the principle of integrity governance and protecting shareholders' rights, the Board of Directors oversees a wide range of environmental risks and opportunities, including climate change-related impacts. In 2020, the Board of Directors resolved to set up a Risk Management Committee to assist in fulfilling its supervision and guidance responsibilities. The members of the Committee were Independent Directors who regularly listened to the reports from the risk management team, supervised the execution of risk management by the Company and its important subsidiaries, reviewed major environmental issues, and submitted them to the Board of Directors for discussion.

In order to implement sustainable measures, the Board of Directors approved the “Corporate Social Responsibility Best Practice Principles,” and established a Corporate Sustainable Development Committee with the Company's General Manager as the chairman to carry out various sustainability actions. In terms of climate action, the committee acts as a platform for horizontal connection and vertical integration. Each team, based on its responsibilities, evaluates potential climate-related risks and opportunities, formulates countermeasures, plans, executes, and discloses greenhouse gas inventory, and regularly tracks carbon reduction performance.

In view of the official publication of Carbon Border Adjustment Mechanism (CBAM) by EU in 2021, the Board of Directors assigned the responsible department to analyze the potential impact of the carbon tax and carbon trading systems to the Company. Since CBAM initially applies to the emission-intensive products, there is no immediate and direct impact to Oneness Biotech. We will pay attention to the development of this issue.
 

Strategy

Oneness Biotech had held multiple workshops participated by dedicated specialists and senior managers from various departments who had intensive discussions with external third-party professional teams to analyze short-term, intermediate, and long-term potential physical and transition risks as well as related business opportunities. The Company then formulated mitigation and adaptation strategies to enhance corporate climate resilience and support the goals of SDGs 13 Climate Action.

According to the impact level and the urgency of the risks, Oneness Biotech identified “increase of severity and frequency of extreme climate events” and “extreme rainfall and drought” as the major climate-related risks. Therefore, we take priority to set the relevant strategies as well as executing mitigation and adaptation actions to enhance climate resilience.

In order to enhance climate resilience, the workshops not only mitigate risks, but also identify potential opportunities in response to climate change.

Scenarios for Resilience

Based on the recommendations of the TCFD guidelines, Oneness Biotech used the worst-case scenarios to assess the business impact of climate change, and incorporated the results into the risk management procedures to take appropriate adaptation actions.

Physical Risk

The disaster potential map of the National Science and Technology Center for Disaster Reduction marked risk of flood disasters of each area in Taiwan in the most severe scenario (RCP 8.5). Placing the area of potential flooding caused by extreme rainfall, a daily rainfall exceeding 650 mm, with the Nanchou Plant area (figure 1), it shows that the Nanchou Plant is not in the potential flooding area under the extreme rainfall scenarios. In order to prevent floods with high standards, the height of the Nanchou Plant was increased by 85 cm during the planning of the construction and a comprehensive drainage system was set up to effectively reduce the impact.

The subsidiary Cotton Field Organic Farm is also one of the suppliers for FESPIXON^® cream's plant-based raw materials and is in an area of potential flooding caused by extreme rainfall with a daily rainfall exceeding 650 mm (figure 2). In order to avoid the impact of extreme rainfall, the government has built a retarding basin with an area of approximately 10 hectares in the local area. Cotton Field Organic Farm not only has added facilities such as its own retarding basin, water gates, and water pumps in the area, but also conducted drainage cleanings every year, so that it is expected to effectively reduce the risk of flooding. On the other hand, Oneness Biotech has established inventory principles to avoid interruption of supply caused by flooding. The raw materials have a safe inventory amount ranging from three months to one year in response to the delivery duration to ensure that the inventory can be replenished at any time. Plectranthus amboinicus is planned to be grown off-site to avoid the climate impact of a single region.

Transition Risk

Oneness Biotech is not an energy-intensive company and based on the risk identification procedure, transition risks will not have a significant impact on its operations. We still pay close attention to global climate-related measures and analyze the financial impact of the transition risks based on the carbon reduction scenario of IPCC AR6 SSP1-1.9.

Facing the challenge of the Taiwanese government's 2050 net zero goal, Oneness Biotech simulated the need to use renewable energy in accordance with the law and its result in an increase of operating costs. In order to reduce the impact of the transition risks, we have completed the carbon footprint inspection of the product FESPIXON^® cream, continued to promote various energy-conservation measures, planned the feasibility of using renewable energy in advance, and sought various possible carbon reduction opportunities.

Risk Management

In order to enhance the Company's corporate governance, establish an effective risk management mechanism, assess and supervise the risk-taking ability and the current risk management situation, the Oneness Biotech Board of Directors approved the “Risk Management Policies and Procedures” in 2020 as the Company's highest guiding principle of risk management. Trough the policies and procedures, the Company integrates and manages various potential strategic, operational, financial and hazardous (climate change, legal compliance, market competition) risks that may affect operations and profitability, carries out risk warnings and takes appropriate preventive measures, or maintains operational activities in the event of an accident.

The responsible unit identifies relevant risk factors, analyzes the potential impact of each risk on the Company's operations, and develops and adopts measures to control risks within the Company's tolerable range. The Risk Management Committee receives regular reports from the Risk Management Task Force and supervises the status of risk management execution by the Company and its important subsidiaries.

In the second Risk Management Committee Meeting in 2021, it monitored extreme climate risks and formulated relevant countermeasures including insurance coverage and compensation mechanism, raw material inventory and future production responses, and etc.

Metrics and Goals

In line with the Government's goal of 2050 net zero emission, Oneness Biotech has taken active carbon reduction after completing greenhouse gas inventory in 2021. Furthermore, we set the ambitious targets for carbon reduction, and will continue to promote energy-saving replacement, renewable energy and carbon credit projects. Taking 2021 as the baseline year, we aim to reduce 100% Scope 1 and Scope 2 emissions and reach carbon neutrality by 2025.

Mitigation Measures

“80% of the environmental impact of a product is determined at the design phase.” In order to take into account the health of human beings and the environment, FESPIXON^® cream is made using natural herbs as the main raw material. Compared to using chemical raw materials as the source, natural ingredients can reduce greenhouse gas emissions and environmental impact. In order to further reduce carbon, Oneness Biotech checked the carbon footprint of the product FESPIXON^® cream in 2021 and obtained a third-party certification from SGS in April 2022. As the first step of carbon reduction, product carbon footprint inventory enables Oneness Biotech to understand the emission hotspots in product life cycles and take effective improvement measures.

According to the analysis on carbon footprints, the emission hotspots of Oneness Biotech are in the electricity usage at the production phase. Therefore, we take energy efficiency improvement as the key factor in reducing carbon footprint. In the future, we will gradually promote energy conservation measures such as making improvements to air conditioners, water recycling, and air compressors. Meanwhile, in response to the development of global renewable energy sources, the Company has also begun to evaluate setting up solar power generation devices to meet the increasing energy demand due to the increasing production capacities in the future.
 

ISO 14067 Product Carbon Footprint Verification Statement

Adaptation Measures

In the face of increasing extreme weather phenomenon and events, resilience against climate disasters is an important part of business operations

Energy Consumption Analysis

Past electricity consumption of Oneness Biotech's operationg sites (unit: kWh)

Note: The Nangang Laboratory is leased from the Incubation Center affiliated with the Genome Research Center of the Academia Sinica. There are no direct electricity consumption statistics and the annual electricity price in 2019 is NT$2.619/kWh, the electricity price in 2020 is NT$2.5986/kWh, and the electricity price in 2021 is NT$2.6253/kWh.

2021 Energy Consumption Analysis

Carbon Emission Analysis

Scope 1: Direct Emission

Use the four types of emission sources in stationary, mobile emissions, air conditioning effusion, and wastewater treatment, and use IPCC AR5 Global Warming Potential (GWP) to tally statistics.

Carbon Emission

Scope 2: Indirect Emission

Carbon Emission (unit: TonCO₂e)

Scope 3: Other Indirect Emissions

Based on the ISO 14067 carbon footprint analysis, the emissions at the raw material phase (including the purchase of products and services, and upstream transportation and distribution) account for 22.8% of the product life cycle, only second to the production phase as the most important indirect source of emissions.

Carbon Removal

Research indicates that organic farms sequester 26% more soil carbon fixation than non-organic farms18. Cotton Field Organic Farm uses organic farming method that not only avoids indirect emissions from the use of chemical fertilizers, but also reduces nitrous oxide (N2O) emissions from synthetic nitrogen sources, and increases the soil’s organic carbon content and achieve carbon sinks. Although there currently is no credible quantitative measurement method for the calculation of carbon sinks in the world, Oneness Biotech will include that in future evaluations.

Carbon Reduction

In order to gradually move towards Oneness Biotech's carbon reduction goal, we will complete the first ISO 14064 audit and the third-party verification in 2022. Based on the inspection results, we will review and improve the energy efficiency of the equipment, and assess the feasibility of renewable energy to meet the rising demand for electricity in the future and to reduce environmental impact. Please refer to Waste Management for the current scope 3 carbon reduction measures.

※The above content is taken from the ESG Report