Sustainable Development
Message from the General Manager
In the past year, the world has faced numerous challenges, with the ongoing Russia-Ukraine war, geopolitical unrest, increased pressure on the supply chain, and inflation driving up operational costs, all impacting market demand. The re-election of former U.S. President Donald Trump has further introduced new uncertainties to the global economy and climate policies. Trade protection policies are triggering a new round of trade wars, impacting the global supply chain; adjustments in energy policy may hinder the progress of carbon reduction, and businesses need to carefully weigh their strategies in energy. Meanwhile, according to the Global Risk Report 2025, extreme weather is no longer just an environmental topic but has become a critical factor directly affecting economic development. This is no longer a future risk, but a current reality. Therefore, for a company to maintain longterm competitiveness, sustainability must be incorporated into core decisions.
Despite the uncertainties in the external environment, Phihong continues to move forward steadily. In 2024, our revenue decreased by 11.6% compared to the previous year, but the gross margin still maintained slight growth. In terms of our main business, we continue to promote more efficient and environmentally friendly power technologies. In power supply products, we focus on high energy efficiency, high power density, and low-carbon design. Among these our wide-bandgap semiconductor GaN (Gallium Nitride) power supplies being the most widely recognized in the market. This technology not only significantly reduces product volume and weight, but also lowers the carbon footprint of materials. At the same time, it reduces energy consumption during transportation and use, thereby contributing to carbon emissions reduction. With the rapid growth of the electric vehicle market, the demand for charging stations is also continuously increasing. We are actively developing highperformance, high-power charging technologies and collaborating with government and corporate partners to jointly promote the construction of charging infrastructure, accelerating business transformation and growth.
In terms of our sustainability commitments and actions, we are dedicated to promoting key actions across the three major areas of sustainable development:
Environmental (E): Promoting circular economy and low-carbon design, strengthening management of carbon emissions and energy, and working collaboratively with the supply chain to reduce carbon emissions.Social (S): Ensuring workplace safety, promoting diversity and inclusion, valuing human rights and talent development, providing competitive compensation and benefits, and continuously investing in public welfare.Corporate Governance (G): Enhancing the effectiveness of the Board of Directors, implementing risk management, advancing research and innovation, and strengthening the sustainable supply chain. Furthermore, in 2025, Phihong officially introduced the Task Force on Nature-related Financial Disclosures (TNFD) framework, incorporating nature-related topics into the TCFD report for the first time, demonstrating its commitment and action toward sustainable development.
Phihong demonstrates outstanding performance in sustainable development! In Q1 2024, we successfully passed the SBTi carbon reduction target validation, and in Q4, received the EcoVadis Gold Medal, the Taiwan Corporate Sustainability Report Gold Level, and the RBA VAP Silver Rating. In addition, our CDP Climate Change evaluation received a B rating, and we implemented ISO 50001 Energy Management standard, ISO 14067 Carbon Footprint Inventory, and ISO 27001 Information Security Management standard, all of which were verified by third parties. Notably, Phihong has won the Golden Award for Happy Enterprises for five consecutive years, demonstrating our full commitment to sustainable development.
Looking ahead, while the global economic and political environment remains challenging and market uncertainty continues to rise, our commitment to sustainable development remains steadfast. We will further deepen our ESG strategy, establish specific performance indicators, strengthen internal governance structures, and advance data-driven decision-making to ensure the Company’s development remains aligned with global trends. In fact, a corporation’s influence reaches far beyond its own operations, extending to the entire supply chain, investors, and consumers. Therefore, we are committed to engaging all stakeholders through open and transparent information disclosure, working together to drive meaningful change.
Finally, we sincerely thank all employees, partners, and investors. Your efforts and support empower us to move forward steadily, even in the face of challenges. We will continue to move toward a more sustainable, inclusive, and resilient future!
For a company to maintain long-term competitiveness, sustainability must be incorporated into core decisions.
Group General Manager
Message from the Chief Sustainability Officer
The year 2024 marks a significant milestone for Phihong on our journey toward sustainable transformation. We fully recognize that as the global supply chain undergoes structural shifts and challenges from climate change, businesses must not only pursue steady growth but also embrace their responsibilities in environmental stewardship, social progress, and sound governance. This year, while maintaining stable operations, we have continued to deepen our ESG strategy, demonstrating our firm commitment to sustainable development.
In terms of operational performance, although Phihong encountered certain revenue challenges in 2024, we continued to demonstrate our competitive edge in the global market and our strength in continuous innovation. By enhancing R&D capabilities, optimizing supply chain management, and advancing digital transformation, we effectively responded to industry changes and market fluctuations, reinforcing the foundation of our core business while actively expanding into high-growth areas such as new energy and smart applications. Through strengthening research and development capabilities, optimizing supply chain management, and promoting digital transformation, we have effectively navigated industry changes and fluctuations in market demand. These efforts have reinforced the foundation of our core business while actively positioning ourselves to seize growth opportunities in areas such as new energy and smart applications.
In terms of the three ESG aspects, we have achieved a number of concrete accomplishments that are recognized internationally and carry strong credibility:
Environmental
To respond to the global carbon reduction trend and climate risk management, we successfully obtained validation of our science-based carbon reduction targets (SBTi), confirming that our decarbonization pathway aligns with the global temperature control objectives set out in the Paris Agreement. At the same time, we received a B rating for the CDP Climate Change Questionnaire for the first time, demonstrating our maturity in carbon management transparency and risk response mechanisms. In addition, by obtaining ISO 50001 Energy Management System certification, we have further strengthened our energy efficiency and operational decarbonization performance.
Social
We place great importance on employees’ rights, labor conditions, and workplace safety, and have continuously maintained Silver-level certification from the Responsible Business Alliance (RBA),demonstrating our tangible commitment to human rights protection and social responsibility. Meanwhile, we continue to invest in talent cultivation, gender equality, and local public welfare, building an inclusive and resilient corporate culture.
Governance
Information security and risk management are core priorities in the digital age. This year, we obtained ISO 27001 certification for our Information Security Management System, further strengthening internal controls and security safeguards to protect the data of our customers and partners. In addition, we have continued to enhance the effectiveness of the Board of Directors and the overall corporate governance framework,further improving transparency and strengthening stakeholder trust.
Looking ahead, Phihong will continue to uphold “innovation-driven development and responsible practices” as our core principles. We will deepen our ESG strategy, actively promote net-zero initiatives,strengthen sustainable supply chain management, and work closely with global partners to address climate and social challenges together. We believe that only by embedding the spirit of sustainability into corporate culture and daily operations can we create true long-term value.
Only by internalizing the sustainable spirit into corporate culture and daily operations can a company create truly lasting value.
Chief Sustainability Officer
Sustainable Strategy Blueprint
Phihong adopts the United Nations Sustainable Development Goals (SDGs) as a blueprint, integrating Environmental, Social, and Corporate Governance (ESG) concepts into its corporate culture and operational strategies. Centered on its core business of power research and development, Phihong has formulated a Sustainable Strategy Blueprint aligned with 14 SDGs. Through the implementation of various corporate sustainability initiatives, the Company works alongside global partners to advance the achievement of worldwide sustainable development goals.
Sustainable Development Committee
Phihong officially established the “Sustainable Development Committee” in 2014 and set up the “Sustainable Development Office” in 2021 to lead ESG strategy implementation and facilitate crossdepartmental communication and collaboration. To further enhance the Company’s sustainability governance framework, a “Chief Sustainability Officer” position was established in September 2023, appointed to a Special Assistant to the General Manager’s office.
The “Sustainable Development Committee” is chaired by the Group’s General Manager and comprises seven functional sub-groups. Its members consist of first-level supervisors from each division, and the committee’s operations are coordinated by Phihong’s ESG dedicated unit, the “Sustainable Development Office.” The committee convenes monthly meetings to ensure the effective implementation of ESG objectives and to verify that project development is aligned with the Company’s sustainable development policies.
Starting in 2023, the Chief Sustainability Officer has regularly reported progress to the Board of Directors. In 2024, a total of five reports were presented, covering issues such as the progress of Greenhouse Gas inventories across major production sites, the establishment of the “Sustainability Report Compilation and Assurance Procedures,” the revision of the “Code of Ethical Conduct,” and the approval of significant sustainability issues and the report itself. This series of initiatives demonstrates Phihong’s firm commitment to advancing corporate sustainability and its dedication to embedding Environmental, Social, and Corporate Governance (ESG) principles into corporate culture and operational strategies in alignment with the United Nations Sustainable Development Goals (SDGs).
Main Responsibilities of the Sustainable Development Committee
▪Formulate and advance sustainable development policies, integrating corporate sustainability values into the Company’s business strategies.
▪ Review the Company’s sustainability policies, objectives, strategies, and action plans, and assess their effectiveness.
▪ Guide and monitor the progress of various sustainability action plans and drive continuous performance improvement.
▪Oversee the preparation and publication of ESG sustainability reports.
Phihong's Sustainable Development Committee
Sustainability Policy
To advance sustainable development, Phihong formulated the “Sustainable Development Practices Guidelines” in 2022, which were approved by the Board of Directors. The guidelines clearly define four core policies that serve as the Company’s highest guiding principles for sustainability: (1) strengthening corporate governance, (2) promoting environmental sustainability, (3) Upholding social welfare, and (4) enhancing transparency in corporate social responsibility information disclosures.
In addition, the company has adopted a series of management guidelines, including the “Sustainable Development Committee Charter,” the “Corporate Governance Best Practice Principles,” the “Business Ethics and Conduct Guidelines,” and the “Code of Ethical Conduct.” These policies are continuously reviewed and updated in accordance with international developments, regulatory recommendations, and practical operational needs to ensure that the Company’s sustainability strategy remains forward-looking and effectively implemented.
Strengthening Corporate Governance
Promoting Environmental Sustainability
Upholding Social Welfare
Enhancing Transparency in Corporate Social Responsibility disclosures
Sustainability Vision Project
Phihong regards ESG as a core corporate commitment. Since 2022, the Company has comprehensively launched the “ESG Sustainable Vision Initiative,” which is grounded in the three ESG dimensions and the annual material issues. This framework guides the formulation of short-, medium-, and long-term sustainability goals. Through annual reviews and refinements, Phihong ensures that its strategies remain continuously optimized. We embed the concept of sustainable operations throughout our global facilities, integrating it with our core competency in power research and development to drive each department in implementing more advanced sustainability practices. The “Sustainable Development Office” serves as the core driving unit of the initiative, while various functional committees are responsible for executing their respective tasks in a coordinated manner. Monthly meetings are convened to review the progress of targets, demonstrating the Company’s strong commitment to fulfilling its sustainability pledges. In addition, through the promotion of the Sustainable Vision Initiative, Phihong actively cultivates professionals specializing in sustainability and carbon management, keeping pace with evolving trends and working collaboratively to create a friendly and sustainable future.
Sustainable Vision and Strategy
Vision: To adopt ESG as the blueprint for sustainability, integrate the Sustainable Development Goals (SDGs), and promote low-carbon power to create sustainable value.
Strategy: To integrate economic growth, social inclusion, and environmental sustainability into operational decision-making, thereby advancing the achievement of sustainable development goals.
Internal carbon pricing (ICP) management mechanism
To enhance the integration of climate risks into operational decision and to strengthen energy efficiency and carbon reduction performance, Phihong Technology officially implemented an Internal Carbon Pricing (ICP) mechanism in October 2025. By internalizing carbon costs, the mechanism aims to strengthen carbon management in energy use and capital investments, while aligning the Company’s decarbonization strategy with global net-zero transition trends.
Carbon price setting principles and governance framework
After comprehensive consideration of global carbon market trends, carbon fee and carbon tax in major countries, supply chain net-zero requirements, and Phihong’s decarbonization roadmap, the company has established a shadow carbon price of NTD 3,000 per metric ton of CO₂e. This internal carbon price serves as a reference for internal energy management, equipment investments, and major operational decisions, and reflects Phihong’s forward-looking expectations regarding carbon costs.
Phihong integrates the ICP mechanism into the procurement and change management processes for energy equipment. When evaluating investment proposals, potential carbon costs are assessed so that decisions consider not only economic returns but also energy efficiency, carbon emissions, and lifecycle costs. The Company conducts an annual review of the appropriateness of its internal carbon price and refers to ICP practices adopted by leading global technology manufacturing companies to maintain competitiveness and scientific principles.
Application of internal carbon pricing (ICP) in operational processes
- Energy equipment investment assessment: Integrate shadow carbon pricing into feasibility analyses to enhance the investment attractiveness of low-carbon equipment.
- Optimization of energy and carbon management systems: Simultaneously improve data quality and audit to support transparency and validity in internal carbon pricing operations.
- Strengthen climate risk management: By internalizing carbon pricing, the company increases sensitivity of decision making to rising carbon cost scenarios and mitigates transition risks over the medium and long term.
Promotion of group low carbon technologies seminar
Starting from 2025, Phihong will host an annual seminar with participation from all energy management teams to share knowledge and successful cases. The initiative aims to accelerate the development of energy saving and carbon reduction technologies. Related technologies include high-efficiency process equipment, energy management systems, renewable energy applications, and process emission reduction measures, which continuously enhance the group’s overall energy efficiency and carbon management performance.
