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Climate-related Disclosures
The increasing frequency of extreme weather in recent years indicates that the crisis brought about by global warming is imminent. As a result, governments around the world are paying more attention to the issue of climate change, and through the enactment of regional laws and regulations in various countries, including the European Union's carbon tax, and the enactment of Taiwan’s own Climate Change Response Act, we have been compelled to incorporate the issue of climate change into the management of ABC's operations. ABC not only identifies the operational risks associated with climate change but also references the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) issued by the Financial Stability Board (FSB). We incorporate the four core areas of disclosure – "governance,""strategy,""risk management,"and"metrics and targets" – into our operational management. We also disclose our governance performance in our sustainability report. Our aim is to provide stakeholders with insights into how we address the impacts of climate change, related risks, opportunities, and our corresponding mitigation measures.
Climate-related Disclosures
| Governance | When making major decisions, the Board of Directors includes climate change, transformation risks and physical risks as key issues in its annual work objectives and plans short-, medium- and long-term goals, with the heads of each department serving as members of the ESG Committee, which urges each respective department to implement its annual, medium- and long-term sustainability goals, including the three major aspects of environmental, social and governance. Establishing the ESG (Environmental, Social, Governance) Committee as the top-level internal organization for promoting corporate sustainability development. |
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| Strategies | With reference to the Task Force on Climate-related Financial Disclosures (TCFD) issued by the Financial Stability Board (FSB) in 2017, review and assess the climate change risks and opportunities faced by ABC, and prepare a plan for the implementation of ESG initiatives. change risks and opportunities that the Company is currently facing, and to formulate corresponding action plans. |
| Risk Management | An annual internal assessment is conducted to evaluate and screen ABC's exposure to high risks, bringing together the perspectives of ABC Group's operating locations. |
| Metrics and Targets | From 2020 to the present, we will continue to implement measures to conserve energy and water, reduce waste, and adopt green building.... |
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Financial Impact Corporate Action Plan
| Risk Category | Risk/ Opportunity | Item | Financial Impact Corporate Action Plan |
|---|---|---|---|
| Transformation Risk | Policies and Regulations | Enhanced emissions reporting obligations | In recent years, corporate sustainability development has been receiving increasing attention. Based on past experiences, such as the infamous RCA factory pollution case, it is clear that incidents like these not only result in environmental pollution but also have significant negative impacts on employees, corporate image, and even society as a whole. Therefore, the goal of corporate management should not be solely centered around "profit" but should include building strong communication with stakeholders and ensuring transparency in the company's operations for both investors and the general public to scrutinize. By doing so, a company can not only help identify and strengthen areas of improvement but also leverage its strengths and opportunities. Starting from 2020, ABC Group has been publishing annual sustainability reports alongside its annual reports to disclose the group's annual operational performance. For ABC, issuing sustainability reports carries significant financial implications. Firstly, Taiwan’s FSC has required all publicly listed companies to issue sustainability reports by 2025, and ABC has taken proactive steps to prepare and publish these reports. Secondly, sustainability reports can provide insights into the Company's operations, enabling investors to have a more comprehensive understanding of ABC's information, thereby increasing stakeholder's willingness to invest and enhancing the company's image. Additionally, it helps maintain positive relationships with employees, and it also addresses the impact of climate change by setting short, medium, and long-term goals for greenhouse gas reduction, contributing to environmental sustainability. The content of this report includes the ESG framework, policies, and action plans, topics of interest to stakeholders, ESG performance assessments, and future improvement directions and goals. |
| Physical Risk | Long-term | Increases in average temperature | Since the Industrial Revolution, humanity has rapidly developed new technologies, but this development has also resulted in the emission of significant amounts of greenhouse gases. The accumulation of excessive greenhouse gases in the atmosphere has led to climate change, which has had a major impact on the environment and human life. For businesses, extreme weather events associated with climate change can disrupt operations by causing interruptions in the supply of raw materials and goods transportation or even power outages that prevent factories from operating as usual. This can result in delayed production, failure to meet customer expectations, and reduced profitability, posing significant financial risks to companies like ABC Group. Currently, Taiwan's primary method of power generation is through thermal power plants, which are one of the major sources of greenhouse gas emissions. To reduce energy consumption and lower greenhouse gas emissions, ABC Group has implemented various energy-saving measures. These measures include installing cooling and heat dissipation fans in equipment, replacing public lighting with energy-efficient LED lighting in the second plant, using temperature-controlled water dispensers in non-operating areas to reduce energy consumption, and implementing timer switches for nighttime lighting in the factory area to save energy. |
| Opportunities | Resource Efficiency | Utilizing more efficient production processes | In today's increasingly competitive market, companies face the risk of continuously rising raw material prices. Excessive raw material costs can lead to higher product prices, which may affect customer willingness to purchase and, ultimately, result in lost orders, which poses a significant financial risk to ABC Group. Finding ways to reduce costs, improve production efficiency, and maintain product quality while facing these challenges is a key concern for ABC Group. ABC Group's specific ways to enhance the higher efficiency of the production process include replacing part of the production lines with automated production lines to reduce labor costs and increase production capacity by 150%, using instruments for external inspection to reduce the incidence of misjudgment by personnel and reduce the number of manpower for external inspection by approximately 75%, and introducing multi-functional automated package testing machines to integrate multiple aging production processes into an all-in-one machine for simultaneous production, thereby streamlining the operating procedures. |
| Recycling and reuse | The rapid development of human civilization has led to the production of numerous goods that generate recyclable or non-recyclable waste throughout their lifecycle. In Taoyuan City, where ABC Group is located, business waste disposal methods typically involve incineration at facilities like the Hsing Yung Waste Incineration Plant or transportation to other counties for processing. However, in recent years, Taoyuan City has experienced an increase in waste generation due to population growth, placing a heavy burden on the main waste incineration facilities like Hsing Yung. This increased demand for waste processing could pose challenges in the future. Beyond municipal waste, there is also a concern about hazardous waste and the improper disposal of recyclable waste, which can result in environmental pollution and reduced economic value. Inadequate waste management can erode stakeholder confidence in the Company, tarnish its brand image, and lead to significant financial risks such as order losses. Addressing waste management and promoting recycling and reuse can present new opportunities for ABC Group. Proper waste recycling not only helps reduce costs but also demonstrates ABC's commitment to sustainability, attracting the attention of investors and stakeholders. ABC Group's specific ways to enhance resource efficiency include the digitization of resource requisition processes to reduce paper usage, the replacement of its existing wooden pallets with more durable aluminum pallets (once wooden pallets are retired, they can be repurposed for other uses), the collection and reuse of tin dregs and cardboard waste for further use, minimizing resource wastage and promoting sustainability. | ||
| Switching to more efficient buildings | In order to cope with the impact of climate change, it is difficult for old building models to meet the concept of environmental friendliness. In order to fulfill the spirit of sustainability and reduce the impact on the environment, ABC initiated an expansion project for Block C at its Yangmei Plant 2 headquarters on January 12, 2021. This expansion involved the incorporation of new equipment and technologies aimed at increasing production capacity and developing competitive products within a mid-term plan. For ABC, transitioning to a more efficient building has significant implications for financial risk; by utilizing more energy-efficient production lines to manufacture more products, ABC not only meets its delivery deadlines but also incorporates the concept of "energy-saving" into each product, aligning with customer expectations and promoting the spirit of sustainable development. To align with the international trend towards achieving net-zero carbon emissions, the facility was designed as a green building integrated with smart technology. The primary objectives are sustainability and energy efficiency. This facility has already obtained the "Candidate Green Building Certification" issued by the Ministry of the Interior. Upon its official launch in 2023, it will become a certified green building, reflecting ABC’s commitment to environmentally friendly and energy-efficient practices. | ||
| Reducing Water Consumption | In addition to the factories in Taiwan, ABC Group also operates factory plants in Shanghai and Guangzhou in China, as well as in Malaysia. Access to clean water is essential for daily life, and under the influence of climate change, different regions will face varying degrees of water resource risks. Saving water resources can not only reduce the group's costs but also mitigate the impact of water resource risks. However, because water consumption in ABC Group's processes is relatively low and the majority of water usage is related to domestic consumption, the financial risk associated with water is relatively low for ABC Group. ABC Group also utilizes recycled water for reuse to reduce water wastage. Specific actions taken by ABC Group to reduce water consumption include: lowering the pressure of water from taps, reuse of primary recycled water in the production of purified water, reuse of second-stage recycled water in wastewater concentrators, implementation of measures to monitor water resources and introduction of domestic wastewater treatment facilities, which are all multi-pronged measures to reduce the consumption of water resources. |
SASB
| Topic | Criteria Code | Disclosed Item | Content | Corresponding chapter |
|---|---|---|---|---|
| Energy Management | RT-EE-130a.1 | Total energy consumption (GJ), percentage of purchased electricity (%), Percentage of energy from renewable sources (%) | Total energy consumption: 46,844.61GJ Percentage of purchased electricity: 100% Percentage of energy from renewable sources: 0% | 3.2 Energy Resources and Energy Conservation Measures |
| Hazardous Business Waste | RT-EE-150a.1 | Total amount of hazardous waste (tons), recyclable percentage (%) | Total amount of hazardous waste:70 tons Percentage of recyclable waste: 33% | 3.4.1 Waste Management |
| RT-EE-150a.2 | Reportable leakage incidents (cases) and amount recovered (KG) | 0 cases; 0 KG | ||
| Product Safety | RT-EE-250a.1 | Total number of product recalls | The total number of product recalls is 2,737,592 pcs | NA |
| RT-EE-250a.2 | Financial loss due to lawsuits related to product safety | There were no financial losses due to lawsuits related to product safety | 1.4 Compliance | |
| Product Lifecycle Management | RT-EE-410a.1 | Percentage of revenue from IEC 62474 compliant products (%) | Not compliant with IEC 62474, but compliant with ROHS and REACH requirements | NA |
| RT-EE-410a.2 | Percentage of revenue from Energy star compliant products (%) | Not applicable | NA | |
| RT-EE-410a.3 | Income from products manufactured from renewable energy sources | Not applicable | NA | |
| Source of Raw Materials | RT-EE-440a.1 | Explain the risks associated with raw materials and related strategies | ABC has developed an emergency response plan and a business continuity plan. Regular drills have been organized to ensure the safety of equipment operations, enhance employees' response to a crisis, shorten the time of business disruption, and minimize impact. | NA |
| Business Ethics | RT-EE-510a.1 | Explain the strategic actions against bribery, corruption and anti-competitive behavior | ABC's "Business Integrity Code of Conduct" has outlined preventive measures for business activities that are prone to higher risk of unethical behavior. Issues that are of concern to internal and stakeholders are subjected to risk assessment at the end of each year to ensure that the system remains effective. | 1.3 Ethical Corporate Management |
| RT-EE-510a.2 | Financial losses resulting from legal proceedings related to corruption and bribery | None | 1.4 Compliance | |
| RT-EE-510a.3 | Financial losses resulting from lawsuits related to anti-competitive behavior | None | 1.4 Compliance | |
| Activity Metrics | RT-EE-000.A | Production volume by product category | Inductors 1,328,899,000 PCS | 2.3.4 Production Volume of Main Products |
| Ceramic heat sinks 156,077,000 pcs | ||||
| Precision metal parts 50,680,000 pcs | ||||
| RT-EE-000.B | Employees | 1,071 employees | 4.1 Human Resource Structure |