All large-scale production sites of YFY are equipped wi th dus t col lec t ion sys tems and moni tor ing equipment , which are cont inuously checked, adjusted at any time, and regularly repor ted to ensure no emissions of ozone-depleting substances (ODS) and strictly control air quality. 

The primary guidelines followed are ISO 14064-1 and the GHG Protocol. Plants in Taiwan use GWP values from IPCC AR5, whereas YFY Inc. (the parent company) and Taiwan's corrugated container plants use IPCC AR6. In Mainland China, plants use either IPCC AR6 or the "Accounting Guidelines for the Paper Industry." Scope 1 and Scope 2 emissions are reported consistently. For corrugated container plants in Mainland China, Scope 1 emissions mainly come from boilers, while the corrugated container plant in Vietnam reports only Scope 2 emissions related to electricity. Additionally, Yangzhou Plant and Dingfeng Paper Industry calculate emissions in five categories—fossil fuel combustion, process emissions, wastewater treatment, net electricity purchase, and net heat purchase—according to the "Accounting Guidelines for the Paper Industry." The first three categories are classified as Scope 1, while the latter two are Scope 2.

We uses the core elements of the Task Force on Climate-related Financial Disclosures (TCFD) as an information framework for identification and analysis to implement the GHGs reduction plan with a rigorous attitude, and contribute to the goal of global net zero carbon emissions.

*Scope of data: All production sites listed in the “Entities Covered by This Report.”
*Nitrogen oxides: Since the selected testing method is the total nitrogen oxides measurement, N2O cannot be excluded. Therefore, the NOX emissions are disclosed following local regulations and GRI 305-7 reporting requirements.  
*Sulfur dioxide: Since the chosen method is the total sulfur oxides measurement, SO2 cannot be measured separately. Therefore, the SOX emissions are disclosed following local regulations and GRI 305-7 reporting requirements.
*Historical data coverage has consistently been 100%. *Other air pollutants include hazardous air pollutants (HAPs) such as lead, cadmium, mercury, arsenic, hexavalent chromium, and their compounds, regulated under the Environmental Protection Administration’s “Emission Standards for Hazardous Air Pollutants from Stationary Sources.”  
*Emission statistics are based on actual monitoring results from sites and pollutants with available data.

Circular Raw Materials: Extending Resource and Biogenic Carbon Value

For more than a century, YFY has continued to place the circular economy at the core of its operations, promoting the sustainable use of resources from the raw-material stage. Wood chips, pulp, recovered paper, and base paper are among the Group’s principal production inputs. Through the use of recycled fibers and paper recovery, materials are repeatedly reintroduced into production processes, extending material life cycles and reducing demand for virgin resources. In 2025, 96.5% of the raw materials used in products and packaging across YFY’s three major business groups were renewable materials, of which recovered paper accounted for 36.2%. In the Containerboard and Packaging Business Group, more than 90% of the raw materials used in pulp production were sourced from recovered paper. By continuously strengthening paper-fiber circularity, YFY extends the value of biogenic carbon stored in fibers throughout the product life cycle.

Responsible Procurement: Building a Traceable and Sustainable Forest Supply Chain

YFY strengthens upstream raw-material governance through responsible procurement and traceability management, giving priority to raw materials verified by independent third parties and applying forest certification schemes such as FSC and PEFC to reduce risks associated with forest conversion and natural-resource use. In 2025, 95% of the raw materials procured by YFY were sourced from FSC- or PEFC-certified sources. Within CHP’s Taiwan operations, 95.71% of purchased wood chips were certified, while certification coverage for imported pulp reached 100%. During the same year, green procurement of raw materials reached NT$10.3 billion, accounting for approximately 55% of total raw-material procurement, while the Group continued to explore opportunities to expand local sourcing. In addition, the Forestry, Pulp and Paper Business Group manages more than 30,000 hectares of plantation forests across Taiwan and China and continues to advance sustainable forestry practices and FSC Forest Management Certification. Through supplier no-deforestation requirements, certified raw-material procurement, and supply-chain traceability, YFY seeks to protect forests, biodiversity, and natural capital from the source.

To support sustainable consumption and production, YFY recognizes that responsible raw-material management is essential to maintaining long-term, circular, and sustainable operations. The Group gives priority to environmentally preferable products for raw materials, facility operations, and office supplies, including products carrying environmental labels, energy-efficiency labels, and FSC certification. In 2025, 95% of the raw materials procured by YFY were sourced from FSC- or PEFC-certified sources. In line with its green procurement principles, annual procurement of recycled fiber amounted to NT$10.3 billion, representing 55% of total procurement expenditure. Procurement practices are primarily aligned with each business group’s commitments to the use of recycled fibers and internationally certified materials, the production of green products, and customer and consumer requirements, while appropriate risk controls are implemented throughout the process.

Maintaining Stable Circular Use of Key Paper-Fiber Raw Materials and Improving Resource Efficiency

Recent trends in the use of key paper-fiber raw materials show that YFY’s consumption of virgin pulp/wood chips, recovered paper, and base paper for corrugated packaging has generally increased since 2022, with continued growth in 2023 and 2024 alongside business expansion. In 2025, total consumption of these three major raw-material categories was approximately 4.055 million metric tons, representing a slight decrease of approximately 1.7% from 2024, while the overall material mix remained stable. Recovered paper remained the largest category in 2025 at approximately 1.649 million metric tons, accounting for around 40.7% of the three major raw materials. Virgin pulp/wood chips accounted for approximately 1.224 million metric tons, while base paper for corrugated packaging accounted for approximately 1.183 million metric tons. By continuing to increase the use of recycled fibers, certified raw materials, and renewable materials, YFY is able to meet production needs while reducing reliance on virgin resources and improving overall material circularity.

Greenhouse Gas Management

As the global transition to net zero accelerates, carbon pricing mechanisms expand, and Taiwan progressively implements carbon fees and emissions-control policies, greenhouse gas management has evolved from an environmental issue into a key business consideration affecting operating costs, capital allocation, energy strategy, and supply-chain competitiveness. YFY continues to monitor carbon emissions across its operating sites through GHG inventories, energy transition, process improvements, and digital carbon management. In line with its voluntary carbon-fee reduction plans and net-zero transition pathway, YFY has established short-, medium-, and long-term reduction targets, progressively decoupling production growth from carbon emissions and advancing toward net-zero emissions by 2050.

YFY Greenhouse Gas Reduction Strategy

YFY advances GHG reductions through three strategic pillars: “Energy Structure, Process Optimization, and Transformation & R&D.” Under Energy Structure, YFY continues to expand the use of biomass fuels and circular-resource fuels to reduce reliance on fossil fuels, while investing in renewable energy such as biomass energy, biogas power generation, and solar power. Process Optimization focuses on equipment replacement and upgrades, system-level energy efficiency, waste-heat recovery, and productivity improvements to reduce energy consumption and emissions per unit of product. Under Transformation & R&D, YFY is introducing AI-enabled and digital management, renewable-energy and energy-storage systems, and carbon management accounts to monitor emissions at sites and production lines in real time. The Company is also advancing carbohydrate-based low-carbon materials, voluntary emissions-reduction projects, afforestation carbon-credit initiatives, and artificial-wetland reduction methodologies, while incorporating internal carbon pricing into low-carbon transition management.

Greenhouse Gas Reduction Pathway

In response to Taiwan’s carbon fee system, in 2025 YFY had seven entities subject to carbon fees in Taiwan, accounting for approximately 97% of YFY’s total emissions in Taiwan. All seven entities submitted voluntary reduction plans for 2025–2030. Following review by the competent authority, two plants were approved for Preferential Rate A and five plants for Preferential Rate B, and all received carbon-fee preferential treatment for industries at high risk of carbon leakage. Key decarbonization measures include switching to low-carbon and biomass fuels, replacing and upgrading equipment, improving energy efficiency, introducing renewable energy such as solar power, and optimizing compressed-air, paper-machine, and steam systems.

In accordance with the designated GHG reduction targets for entities subject to carbon fees, YFY uses 2021 as the baseline year for its carbon-fee voluntary reduction plans; combined Scope 1 and Scope 2 emissions across Taiwan, mainland China, and Vietnam were approximately 2.574 million metric tons CO₂e. Based on the commitments in each plant’s voluntary reduction plan, YFY has set targets to achieve a 16% reduction from the baseline year by 2030, a 50% reduction by 2040, and alignment with the national net-zero target by 2050。

Greenhouse Gas Emissions Trends and Reduction Performance

YFY defines its GHG inventory boundary using the operational control approach. Production sites across its three major business groups conduct annual GHG inventories in accordance with ISO 14064-1, the GHG Protocol, or applicable local requirements. The parent company, YFY Inc. (Head Office), introduced GHG inventory and verification in 2023 and completed the first-year GHG inventory for all consolidated subsidiaries in 2025, progressively establishing a carbon management foundation aligned with the financial reporting boundary.

In 2025, Scope 1 and Scope 2 emissions from the three major business groups across Taiwan, mainland China, and Vietnam totaled approximately 2.33 million metric tons CO₂e, a 9.5% decrease from 2021. Scope 1 emissions decreased by 3.3% from 2024, mainly due to reduced coal use, increased use of alternative fuels and biomass energy, and transformation projects at selected sites. Market-based Scope 2 emissions remained broadly stable year on year.

Of this total, Scope 1 and Scope 2 emissions in Taiwan totaled 1.336 million metric tons CO₂e in 2025, down 19.9% from 2021 and 5.1% from 2024; Scope 1 emissions were approximately 1.101 million metric tons CO₂e, accounting for about 82% of Taiwan emissions. With increased use of alternative fuels and biomass energy, Taiwan Scope 1 emissions in 2025 were 19.5% lower than in 2021; biogenic emissions totaled 753,000 metric tons CO₂e.

In 2025, GHG emissions intensity across YFY’s major product categories was generally stable or declining, reflecting the gradual benefits of improved energy efficiency, low-carbon fuel adoption, and process optimization. Consumer Products recorded the most notable improvement, with emissions intensity decreasing by approximately 33%, from 1.29 in 2021 to 0.87 in 2025. Containerboard also declined by approximately 18%, from 0.99 to 0.81. Fine Paper decreased from 1.36 to 1.19, maintaining a long-term downward trend. Although Pulp emissions intensity remained above the 2021 level, it fell from 0.81 in both 2023 and 2024 to 0.77 in 2025. Corrugated Packaging remained stable at approximately 0.10. Overall, YFY continues to reduce carbon emissions intensity per unit of product through process improvements and energy transition.

Strengthening Value Chain Carbon Management and Expanding Scope 3 Inventory Coverage

 Since 2024, YFY has progressively established a Group-wide Scope 3 GHG inventory mechanism, extending carbon management from Scope 1 and Scope 2 to the upstream and downstream value chain. In 2025, YFY further expanded its domestic inventory boundary by including additional paper mills of selected Taiwan subsidiaries, improving the completeness of value-chain emissions data. Scope 3 emissions totaled approximately 1.224 million metric tons CO₂e in 2025. Purchased Goods and Services accounted for approximately 905,000 metric tons, or about 74%; Fuel- and Energy-Related Activities accounted for approximately 194,000 metric tons, or about 16%; and Upstream Transportation and Distribution accounted for approximately 80,000 metric tons, or about 6.5%. YFY will continue to expand inventory coverage and advance supply-chain decarbonization targeting major emissions hotspots in raw materials, energy, and logistics.

Internal Carbon Pricing

YFY is progressively incorporating carbon costs into corporate investment and capital-allocation decisions. Internal carbon pricing is calculated based on the estimated costs required for each plant’s decarbonization measures, including initial investment, subsequent operation and maintenance expenses, and the expected cumulative Scope 1 and Scope 2 emissions reductions, to derive the abatement cost per metric ton of GHG emissions reduced. The Company applies a Shadow Price mechanism, incorporating a carbon price into investment assessments and capital-expenditure decisions. The mechanism is prioritized for listed subsidiaries that are significant emissions sources and serves as an evaluation metric for new investment projects and related capital expenditures.

By translating carbon-reduction benefits into financial value and combining them with payback period (PBP) and investment-benefit assessments, YFY can compare the effectiveness of different energy-efficiency, process-improvement, renewable-energy, and low-carbon technology projects, guiding capital allocation toward low-carbon transition. Based on the consolidated financial reporting boundary, combined Scope 1 and Scope 2 emissions were approximately 2.487 million metric tons CO₂e in 2024 and decreased to approximately 2.409 million metric tons CO₂e in 2025, a 3.1% reduction from the baseline year. The Company uses 2024 as the emissions-reduction baseline year for this reporting boundary and has set targets to achieve a 2% reduction by 2026, a 22% reduction by 2035, a 50% reduction by 2040, and net-zero emissions by 2050。

YFY's global large-scale production bases and main operating bases are equipped with different green energy equipment, including biogas, lignin, waste-derived fuels, etc.We continue to invest in research, from biomass fuels that conform to the concept of circular economy to the use of alternative fuels, gradually reduce the proportion of fossil fuels.

Respond to Global Energy Initiatives, Aligning with Global Standards

YFY joined the RE100 initiative in 2023, becoming the first representative from the global paper industry to declare its commitment to achieving 100% renewable electricity by 2040 and net-zero emissions by 2050. On our RE pathway, we regularly review energy saving and carbon reduction performance. We develop diversified green energy at our operation sites, including solar photovoltaic systems and biomass energy, such as biogas power generation, lignin power generation, and biomass fuels, leveraging industry advantages.

From "Manufacturing" to "Intelligent Manufacturing": YFY and CHP's Integrated AI Team Honored with Harvard Business Review’s Digital Transformation Dingge Award

Since adopting digital transformation and AVM, Jiutang plant has boosted production efficiency by about 2.16%, raising paper machine operating rates from 80% to 94%. This has led to a reduction of 6,000 metric tons of carbon emissions within a year. Moving forward, YFY plans to extend AVM technology to other production sites. Beyond paper production, the technology can also be applied to the production processes of various related industries, enhancing power generation efficiency, improving water treatment quality, and optimizing microgrid energy management. YFY aims to develop AVM applications as a strategic tool to further strengthen operational capabilities.

Low-carbon energy transition: Increasing the use of alternative fuels

What sets the paper industry apart from others is its circular economy process, which creates a renewable energy cycle. Surplus materials from the process are converted into alternative fuels for power and steam generation. To reduce the organic content in water recycling treatment, biogas produced by an anaerobic system is used to generate electricity. This cycle not only meets plant energy needs but also lessens reliance on fossil fuels and addresses waste issues, making it a unique example of energy self-sufficiency in manufacturing. In addition to biomass energy, YFY has invested in solar energy. All qualified plants have completed solar photovoltaic installations that meet MOEA’s requirements for energy-intensive industries. In 2023, these installations were progressively converted to self-consumption, and we applied for renewable energy certificates accordingly. Total photovoltaic power generation exceeded 4.2 million kWh in 2023, with nearly 20% used for self-consumption.

Venturing into energy storage: Taiwan's first cogeneration behind-the-meter energy storage system

In 2023, Ensilience, a YFY subsidiary, and CHP jointly developed Taiwan's first "cogeneration behind-the-meter energy storage system," with a total capacity exceeding 5 MWh. The auxiliary service of the system allows clients to manage energy storage independently by charging during off-peak hours, reducing reliance on Taipower during peak times. This approach alleviates pressure on the grid, lowers plant energy demand, and enables cogeneration units to participate in Taipower's auxiliary services, benefiting both the client and Taipower.

Water Risk Management Programs

YFY has a water risk management program that recognizes operational dependency on freshwater and screens sites via WRI Aqueduct; manages impact through controls beyond legal limits and two-stage discharge; evaluates future quantity/quality risks with monitoring/early-warning; considers stakeholder impacts and transparency; and assesses local regulatory changes including permits.

Dependency-related water risks considered in risk assessment

High operational dependency on freshwater

Paper-making relies on water as a process medium; supply interruptions can halt production, so dependency is explicitly acknowledged in strategy and targets. YFY monitors legal groundwater wells (dynamic/static levels) to maintain safe aquifers.

Portfolio screening for basin stress (TCFD-aligned)

Sites are screened with WRI Aqueduct; seven sites (all corrugated) are projected under SSP1-RCP2.6 to face extremely high water stress by 2030.

Climate physical risks linked to water 

The risk register includes drought/water shortage and continuous rainfall/flooding with financial impact pathways.

Impact-related water risks considered in risk assessment

Effluent quality/receiving-environment risk

All sites meet local standards and set internal limits stricter than legal; design/operations consider receiving water bodies, with hydrology records showing no adverse impact.

Process/endpoint controls 

Upstream controls, coagulation-sedimentation and biological treatment; white-water recycling reduces load/chemicals.

Regulatory compliance risk

We note tightening water-pollution controls and potential fines/treatment costs if non-compliant.

Assessment of future water quantities available

Forward-looking basin stress (2030)

Under Aqueduct projections, seven sites face extremely high stress; these sites are in regulated industrial parks with municipal supply planning and together account for ~0.28% withdrawals / 2.42% consumption of the Group.

Assessment of future water quality-related risks

Early-warning & real-time monitoring 

YFY runs online monitoring for process/discharge, public real-time disclosure, alerting and emergency shutdown protocols—explicitly framed as critical under intensifying climate hazards (typhoon/earthquake).

Two-stage discharge pathway 

On-site treatment to exceed legal standards → industrial-park treatment → discharge to natural water bodies; hydrology records show no adverse impact.

Assessment of impacts on local stakeholders

Transparency & community interface 

YFY publicly discloses real-time water quality and operates wetland programs where treated effluent supports habitat (e.g., Old Railway Bridge Constructed Wetland), with community volunteering.

Stakeholder concern recognized in risk map 

“Stakeholder concerns or negative feedback” is tracked with mitigation (water/energy saving plans and communication).

Assessment of future potential regulatory changes at a local level

Permitting/tariff/compliance tightening 

Chung Hwa Pulp, a YFY subsidiary, identifies increased difficulty obtaining withdrawal permits, rising water costs, and stricter pollution control as medium-term, likely risks with financial effects.

Maximizing Water Value Through Responsible Management

In order to uphold the concept of maximizing the value of water resources, also ensure that products can meet quality and safety requirements of customers, YFY takes water prudently; monitors, evaluates and analyzes water carefully; and discharges appropriately.

We trace upstream and innovate such as the development of low water consumption products, online recycling and the deployment of back-end water treatment technologies that we can use recycled water to replace clean water. According to the annual report to the Water Resources Department of the Ministry of Economic Affairs, the water reuse rate of YFY process in 2023 was more than to 90%. Additionally, the Yangzhou plant of the Containerboard and Packaging Group has implemented a rainwater recycling system to convert rainwater into renewable resources, promoting water reuse. In 2023, this system saved about 133 million liters of water and nearly 300,000 RMB in sewage treatment costs.

Ｍost of our productions bases are located in non-protected areas and non-agricultural areas with abundant water. But In the face of extreme conditions of climate change, and according to the risk and opportunity assessment and control system of ISO14001, the water management and control standards from our plants are all superior to the laws and regulations. 

By 2030, it is projected that seven sites will be in areas with extremely high water stress (>80%). These sites are all corrugated container plants, which have significantly lower water withdrawal and consumption compared to paper plants. They are situated in industrial zones carefully planned by local governments, with water usage precisely aligned with these plans. The process effluent is treated on-site to exceed regulatory standards, then further treated by the industrial zone's sewage system before being discharged into natural water bodies. Under strict management, water withdrawal and consumption at these sites account for only 0.3% and 1.4% of YFY's total, respectively, demonstrating extremely low usage.

Starting with agricultural and forestry surplus materials for building materials and papermaking, YFY has embraced zero waste to create a sustainable circular economy. This approach optimizes the use of surplus materials, by-products, and energy resources throughout the value chain, finding new applications. We have developed three key waste management strategies, aiming for a 95% waste-to-resource ratio by 2030, and are committed to reducing outsourced waste by 1% annually compared to the previous year.

Waste is prioritized for recycling, reuse, or incineration with energy recovery. Only waste that cannot be repurposed is incinerated without energy recovery or sent to landfills. In 2023, although total waste generated increased, repurposed waste also rose by 6.6% from the previous year. Waste repurposing includes 43% reused, 34% incinerated with energy recovery, and 17% recycled into paper products, achieving a 93.3% waste-to-resource ratio.

*The scope of data covers all production sites of the entities covered by this Report.
*Following a review of waste treatment classifications and terminology, the presentation of waste treatment categories was revised beginning in 2025. 
“Preparation for Reuse” corresponds to the “Reuse” category reported in the previous year, while “Recycling” represents the aggregate of the previous year's “Reuse,” “Recycling,” and “Production of Alternative Fuels” categories. 
In addition, in accordance with the requirements of GRI 306, “Incineration” has been further classified into “Incineration (with Energy Recovery)” and “Incineration (without Energy Recovery).” 
“Incineration (without Energy Recovery)” corresponds to the “Incineration” category reported in the previous year.*In line with the revised treatment categories, the formula for the resource recovery rate has also been updated as follows: 
Resource Recovery Rate = (Preparation for Reuse + Recycling) / Total Waste Generated.*Notes on the classification of waste diverted from disposal and directed to disposal: 
1. Recycling operations include recycling waste into paper or other products; reuse following solidification or physical treatment, such as use as raw materials for cement, cement products, 
thermal insulation materials, or fertilizers; and production of alternative fuels. 
2. Other disposal operations refer to waste managed by third-party organizations through recycling or centrally treated by licensed third-party waste disposal organizations.