Climate Action

It is generally believed that by incorporating ESG factors into investment decisions and management processes, asset management companies can reduce financial losses or reputational impacts when facing environmental and social risks, thereby enhancing operational resilience.  In recent years, as global governments and regulatory agencies have actively guided capital towards ESG-related projects, more institutional investors are demanding that their funds be invested in projects that align with sustainable development goals, pursuing long-term value and stable returns. Therefore, ESG is no longer merely a representation of philanthropy and social responsibility but has become a crucial component of corporate operations and investment decision-making.

Diamond Biofund focuses on the biotechnology and healthcare investment sector, targeting competitive biotech startups involved in new drug development, advanced medical devices, innovative medical services, medical distribution, and agricultural biotechnology.  This year, in addition to disclosing our company’s environmental information, we also included important environmental-related information for seven of our portfolio companies: Cho Pharma, Inc., Sinew Pharma Inc., StemCyte International Ltd.(StemCyte-KY), Tetanti AgriBiotech Inc., Syncell Inc., Diamond Biofund I Inc., and Diamond Biofund II Inc.  As of December 31, 2024, the total book value (i.e., fair value) of these seven portfolio companies accounted for 97.21% of Diamond Biofund’s total book value of “financial assets measured at fair value through profit or loss—current and non-current.”

The Board of Directors of Diamond Biofund serves as the highest governance body for climate-related matters. The board members possess relevant expertise and are responsible for overseeing and managing climate-related risks and opportunities, as well as driving the company’s overall climate strategy and policies. The Board incorporates climate issues as a key consideration in corporate governance and business strategy, sets climate-related action targets, and integrates climate risk management into the company’s overall risk management and control framework. The Board also evaluates and continuously optimizes the implementation of various risk management mechanisms to ensure sound operations. Under the Board, the Sustainable Development and Nominating Committee has been established, chaired by an independent director.

Diamond Biofund has established a Sustainability and Risk Management Task Force, which is led by the President’s Office under the supervision of the President. The task force is responsible for coordinating climate governance policies and related initiatives, as well as conducting climate risk assessments and developing response actions. Under the Sustainability and Risk Management Task Force, there are three functional sub-group/teams: Corporate Governance, Social Engagement, and Sustainable Finance. Departments participate in each sub-group/teams based on their business functions and responsibilities. The Sustainability and Risk Management Task Force reports at least once a year to the Sustainable Development and Nominating Committee and the Board of Directors on the status of risk management operations. It also requires each unit to develop corresponding control measures, thereby enhancing risk management mechanisms and ensuring the achievement of long-term sustainability goals.

To effectively implement climate governance strategies and policies, Diamond Biofund, with the approval of the Remuneration Committee and the Board of Directors, has incorporated ESG-related key performance indicators (KPIs) into the performance bonus evaluation of senior management (including the President and Vice Presidents), with a minimum weighting of 5%. These KPIs are directly linked to the achievement of ESG goals.

In addition, department heads responsible for relevant ESG initiatives are also evaluated based on ESG-related performance metrics. This top-down performance evaluation mechanism is intended to strengthen the implementation of sustainability practices and reinforce the core principles of climate governance throughout the organization.

Diamond Biofund organized a climate risk workshop, bringing together dedicated personnel from various departments and senior management for joint discussions. A climate risk questionnaire was also distributed to portfolio companies to analyze the potential short-, medium-, and long-term physical and transitional risks faced by Diamond Biofund, as well as related business opportunities. The insights gathered will be used to develop mitigation and adaptation strategies, thereby strengthening the company’s climate resilience.

Transition Risk – Financial Impact Analysis of Energy and Carbon Reduction Policies on Portfolios

To strengthen climate resilience, the workshop not only focused on risk reduction but also identified potential development opportunities arising from climate change adaptation.

Climate Mitigation Opportunity — Financial Impact Analysis of Tetanti’s Carbon Credit Project on Investment Position

To strengthen corporate governance and establish effective risk management mechanisms, the company assesses and monitors risk tolerance and management. In 2022, the Board of Directors approved the “Risk Management Policies and Procedures” as the company’s highest guiding principles for risk management. The company integrates and manages various potential risks that could affect operations and profitability, implementing early warning measures and appropriate preventive actions to maintain operational activities in case of incidents.

The Sustainable Development and Risk Management Task Force is the designated unit responsible for implementing and assessing climate risk management. It operates independently from business units and daily operations. The task force is organizationally positioned under the President’s Office and regularly reports to the Sustainable Development and Nominating Committee as well as the Board of Directors.
The company’s climate risk and opportunity management process is mainly divided into the following steps: identification, assessment, monitoring and reporting, and response.

Each department is responsible for identifying relevant risks and opportunities, as well as assessing and analyzing their potential impact on operations. The Sustainable Development and Risk Management Task Force consolidates these assessments to form an integrated view of overall risks and opportunities. The Task Force regularly reports to the Sustainable Development and Nominating Committee and the Board of Directors, which oversee the implementation of risk management. Climate-related risks are managed as part of the company’s overall risk management framework and are integrated with other risk factors for unified control and monitoring.

Risk Control Indicators
Based on the major climate risk matrix identified in 2024, the company has set control indicators for high-impact risks to ensure the risks remain within acceptable levels.

In June 2024, Diamond Biofund conducted its first greenhouse gas inventory for FY2023, covering the parent company and its subsidiaries. To ensure the transparency and accuracy of carbon emission data, third-party verification is conducted annually. The 2024 greenhouse gas inventory was verified by AFNOR ASIA in accordance with the ISO 14064-3:2019 standard.

• Energy Consumption:
  During 2024, energy usage included 4,231.5890 L of diesel for business vehicles and 173,396.0000 kWh of electricity, resulting in a total energy usage of 777.45 GJ.
• Scope 1:
  Scope 1 mainly includes emissions from official vehicles and refrigerant leakage. Based on the emission factors provided in Version 6.0.4 of the Taiwan EPA’s Greenhouse Gas Emission Factor Management Table, Diamond Biofund’s total Scope 1 greenhouse gas emissions were calculated. As shown in the table below:

• Scope 2:
  In 2024, the electricity consumption at the operational site was 173,396.000 kWh. Based on the 2024 electricity emission factor of 0.474 kgCO₂e/kWh announced by the Energy Administration, Ministry of Economic Affairs, the calculated carbon emissions from electricity use amounted to 82.1897 metric tons of CO₂e.

• Scope 3:
  Calculate emissions from shared electricity usage at office locations, business travel, and investment activities.
• • Shared electricity usage and business travel

• • Investments
    As a venture capital firm, Diamond Biofund identifies its investment portfolio as the largest source of carbon emissions. Therefore, emissions from portfolio companies are analyzed and disclosed in accordance with the SASB (Sustainability Accounting Standards Board) standards. Scope 1 and Scope 2 emissions from portfolio companies are collected and disclosed using the equity share approach.The calculation of emissions from portfolio companies is based on the equity share approach: Σ ownership percentage × (Scope 1 emissions + Scope 2 emissions) of each company.
    For the year 2024, a materiality threshold of 4% was applied, based on the proportion of each portfolio company’s book value as of December 31, 2024, relative to the total book value of all investments. As a result, six portfolio companies were included: CHO Pharma Inc., StemCyte International Ltd.(StemCyte-KY)., Sinew Pharma Inc., Syncell Inc., Diamond Biofund I Inc., and Diamond Biofund II Inc. In addition, although Tetanti AgriBiotech Inc. did not meet the materiality threshold (0.56%), it was first included in the carbon inventory in 2023 as a portfolio company. To maintain consistency in tracking carbon emissions and to support ongoing climate change efforts, it continues to be included in the 2024 inventory.

Diamond Biofund completed its first greenhouse gas inventory and verification for the year 2023 in June 2024. In accordance with SASB guidelines, emissions from portfolio companies were included in the Scope 3 disclosure.

Following the completion of the group’s greenhouse gas inventory in 2024, Diamond Biofund proactively adopted carbon reduction measures and established ambitious emission reduction targets. These targets were approved by the Board of Directors on December 23, 2024, with 2024 set as the base year, and are outlined as follows:

Diamond Biofund will reduce carbon emissions by continuously promoting energy-efficient equipment upgrades, evaluating renewable energy projects, and implementing internal training programs and awareness campaigns on energy conservation and carbon reduction.

Moreover, recognizing that one of our primary emission sources stems from Scope 3—namely, our portfolio investments—we strive to extend our influence and work alongside investee companies to tackle climate change. Each year, we include emissions from investment assets representing at least 80 percent of our total portfolio by book value in our greenhouse gas inventory, support investees in conducting their own GHG inventories and incorporating those data, and, through targeted training, cultivate climate-focused mindsets within those companies. We further guide them in developing their emissions registers and assist in establishing their greenhouse gas reduction targets.

With Taiwan’s carbon fee regime taking effect in 2025 and the EU’s Carbon Border Adjustment Mechanism (CBAM) being implemented, companies are facing the challenges of a carbon-priced era. Starting in Sep. 2025, Diamond Biofund has adopted a Shadow Carbon Price as an internal carbon pricing tool. By setting a non-levied carbon cost, the Company progressively internalizes carbon price impacts into operating decision-making processes.

At the initial stage, the Company’s internal carbon pricing is based on Scope 1 (direct emissions) and Scope 2 (purchased electricity), and is embedded into evaluations related to achieving reduction targets, phasing out energy-intensive equipment, procuring energy-efficient solutions, or purchasing renewable electricity (green power). Going forward, subject to ongoing implementation reviews, the Company will expand application toward Scope 3 by incorporating ICP into assessments of investment targets.

Diamond Biofund references the long-term price corridor proposed by the Carbon Fee Review Committee of the Ministry of Environment and international carbon-price forecasts. Considering feasibility at the outset, the Company has provisionally set an internal carbon price of NT$1,500 per tCO₂e, which is incorporated into various decision evaluations. The internal carbon price level will be reviewed annually to reinforce the Company’s decarbonization commitment.