In 2020, Acer officially implemented the Recommendations of the Task Force on Climate-related Financial Disclosures issued by the Financial Stability Board of the United Nations to analyze the current status of climate-change-related financial disclosures, identify and quantify climate risks, and publicly disclose the potential financial impact of climate change on Acer and its future response strategies. In this section, divided into Governance, Strategy, Risk Management, and Indicators and Goals, we will address the core elements of the TCFD Recommendations.
To realize our vision for sustainable development and continue to improve the Company’s related risk management actions, Acer formally established a Risk Management Committee in 2022 to summarize and control the risk environment, risk management priorities, risk assessment results, and relevant response measures. The committee is composed of the top directors of various business units/functional organizations at the headquarters, with the top director of internal audit as an observer, and is included in the Risk Management Working Group (originally a unit under the Corporate Sustainability Committee (CSC)) as an executive unit. The RMC is responsible for managing and conducting performance tracking on operations and business-related matters, holding quarterly meetings to stay on top of progress toward relevant issues and reporting to the Audit Committee and the Board of Directors at least once a year.
On the issue of climate risk, the Risk Management Working Group is the authority in charge of implementing TCFD, conducting comprehensive assessments of Acer’s potential climate change risks, and developing appropriate countermeasures for the potential climate risks identified. The working group is composed of department-level management representatives from departments including Legal, Finance, Human Resources, Supply Chain Management, Enterprise Communication, Marketing, QA & Services, IT, Environmental Safety and Health, and Asset Management, along with various product business groups and the ESG Office. Its responsibilities include risk identification, potential risk scenarios and operational impact assessments, and planning based on risk scenarios to implement risk prevention and mitigation actions.
Acer assesses the probability of risks occurring and their potential impacts, formulating risk response and mitigation plans and a crisis management mechanism. With regard to opportunities that come with climate change, Acer also continues to pursue improvements to product energy efficiency and strive to integrate our existing and new business groups to create unified low carbon, sustainable smart strategies. In major operating regions, such as Aspire Park in Taiwan, Germany, and the Netherlands, we have built solar power generation facilities to increase the proportion of renewable energy, In the course of expanding the Group’s business through subsidiaries like Acer ITS and Acer Being Communication, helping society and various departments achieve energy-saving goals and promote low-carbon transformation and adjustment.
To improve the mechanisms for the management of risks and opportunities related to climate change, Acer has established climate-related risk management procedures in accordance with the TCFD guidelines. The management process consists of four steps: (1) completing a climate risk inventory, (2) ordering by risk materiality, (3) results and reporting, and (4) response strategies and external disclosure.
Climate Change Risk Identification Procedure
Major Climate Risk Matrix
Risk Name / Explanation of Impact
With the passage of laws and regulations relating to carbon emissions, fees will be levied if greenhouse gas emissions exceed allowances. With emission allowance controls potentially able to increase year by year, related fines may significantly increase operating costs. In addition, there are significant costs associated with carbon emission reduction.
Response Measures/Identified Opportunities
．Commit to setting SBTs in line with the 1.5°C carbon reduction pathway and achieve a 50% reduction in carbon emissions compared to 2019 by 2030
．Continue to optimize the energy efficiency of each operating location and adopt green power, aiming to use 100% renewable energy by 2035
Risk Name / Explanation of Impact
Should Taiwan establish and implement regulations around sustainability and renewable energy development, Acer will need to invest more in constructing renewable energy devices and purchasing Renewable Energy Certificates (RECs)
Response Measures/Identified Opportunities
．Announced participation in the global RE100 initiative, committing to 100% renewable energy by 2035
．Constructing solar power generation facilities in a series of operating locations, generating approximately 3.6 million kWh of green electricity in 2021
Risk Name / Explanation of Impact
Changes in the cost of raw materials needed in the production process (e.g., rare metals or packaging materials) caused by climate change create a risk of increased production costs:
．When suppliers’ raw material costs increase, contracted amounts with Acer will also increase, resulting in higher production costs and affecting profitability.
．Product prices rise, possibly leading to impacts on revenues
Response Measures/Identified Opportunities
．Launched the Earthion initiative to harness the strength of our staff and supply chain partners to strengthen cooperation in green innovation design, management of chemical substances used in production process, green energy use, low-carbon logistics, packaging materials and design, and product recycling, and resource reuse.
Risk Name / Explanation of Impact
To reduce the carbon emissions resulting from Acer’s own operations or respond to demand for low-carbon products/services, expenditures need to move toward low-carbon transition, such as increasing investment into R&D of highly energy-efficient equipment
Response Measures/Identified Opportunities
．Expand the scope of application of product life cycle considerations and evaluate appropriate solutions to reduce carbon emissions and environmental impact throughout the life cycle, with post-consumer recycled plastics (PCRs) used in more than 15 million units in 2021, reducing the use of virgin plastics. In addition, we are also focused on the problem of ocean waste plastic pollution, introducing OceanGlass touchpads made of ocean-bound plastics (OBP) in Chrome and Swift series computer products to reduce product impact as much as possible and provide products that are both environmentally and commercially competitive products.
Risk Name / Explanation of Impact
As more low-carbon products, services, and technologies appear and replace their existing Acer equivalents, this may have a significant impact on the company’s revenues.
Response Measures/Identified Opportunities
．Expand the scope of application of product life cycle considerations and evaluate appropriate solutions to reduce carbon emissions and environmental impact throughout the life cycle, with post-consumer recycled plastics (PCRs) used in more than 15 million units in 2021, reducing the use of virgin plastics. In addition, we are also focused on the problem of ocean waste plastic pollution, introducing OceanGlass touchpads made of ocean-bound plastics (OBP) in Chrome and Swift series computer products to reduce product impact as much as possible and provide products that are both environmentally and commercially competitive products.
Risk Name / Explanation of Impact
If Acer invests in new technologies (such as IoT and AI) that have high carbon emissions and are replaced by other low-carbon technologies, or if partners switch to low-carbon technologies, this could result in the failure of the original investment in new technologies and in Acer suffering financial losses.
Response Measures/Identified Opportunities
．Through ongoing innovative product design and R&D, we have launched products and services including a smart roadside parking management system, home smart energy storage system, smart rainfall and flood control water storage system, and smart water meters to promote smart and low-carbon transformation of cities and improve their ability adapt to climate change.
Risk Name / Explanation of Impact
If Acer is unable to successfully implement climate change mitigation measures and thus generate negative feedback from government, investors, and customers, the company will lose its current position as a market leader in sustainability, resulting in damage to its reputation and potential financial losses.
Response Measures/Identified Opportunities
．Continue to communicate with stakeholders through Acer’s sustainability website, sustainability reports, etc., and participate in organizations related to sustainability issues such as the Responsible Business Alliance (RBA) and the Carbon Disclosure Project (CDP) Supply Chain Program, doing our part to translate the opinions of stakeholders into action. In 2021, we joined the RE100 initiative and were part of launching the Taiwan Climate Alliance to decarbonize our operations and supply chains and reduce climate risk.
Risk Name / Explanation of Impact
An increase in the occurrence of heavy rainfall and the amount of that rainfall may result in:
．Acer’s office buildings and cloud server rooms potentially flooding, resulting in significant asset losses and subsequent recovery costs
．Acer’s supply chain potentially being unable able to supply products as scheduled due to the loss of its own equipment as a result of extreme heavy rainfall, resulting in supply chain disruptions
．Damage to Acer’s warehouse inventory, resulting in asset loss
Response Measures/Identified Opportunities
．Conduct risk assessment for operating and storage locations and suppliers located in areas at high risk of flooding or susceptible to typhoons, and reduce the potential impact of disasters through prudent insurance planning and distributed procurement strategies
．The smart water meter and smart rainfall and flood control water storage system launched by subsidiary Acer Being Communication can help effectively address water resource problems, reduce the impact of heavy rain and typhoon on cities, and improve cities’ climate resilience.
Risk Name / Explanation of Impact
The increasing frequency and severity of typhoons may have the following impacts on Acer:
．Our own operating sites and data centers may be exposed to strong winds, causing damage to equipment and resulting in increased asset losses and maintenance expenses
．Typhoons may damage power systems and cause local power outages, resulting in disruptions to Acer’s operations or services
．Typhoons may disrupt Acer’s supply chain, resulting in disruptions in the delivery of products and services or a decline in quality
Response Measures/Identified Opportunities
．Conduct risk assessment for operating and storage locations and suppliers located in areas at high risk of flooding or susceptible to typhoons, and reduce the potential impact of disasters through prudent insurance planning and distributed procurement strategies
．The smart water meter and smart rainfall and flood control water storage system launched by subsidiary Acer Being Communication can help effectively address water resource problems, reduce the impact of heavy rain and typhoon on cities, and improve cities’ climate resilience.
Risk Name / Explanation of Impact
As the low-pressure zone from the Arctic sends cold air into the middle latitudes, this causes a rapid drop in temperature and can even lead to blizzards and other such weather conditions. When the temperature does drop sharply or blizzards strike, this can cause:
．Interruption to Acer Supply Chain
．Acer products may not be able to withstand severe temperature changes and thus suffer damage, resulting in additional costs, including labor and maintenance expenses
Response Measures/Identified Opportunities
．Monitor supplier locations, warehousing locations, and logistics routes that may be subject to extreme low temperatures to facilitate preparation and rapid response in the event of rapid temperature drops
Risk Name / Explanation of Impact
The increase in the length of the dry season and the duration of extreme high temperatures in East Asia due to global climate change will have the following impacts on Acer:
．Higher electricity costs incurred in maintaining indoor temperatures at office locations
．More frequent use of air-conditioning equipment in cloud server rooms, consuming more power and leading to higher operating costs
Response Measures/Identified Opportunities
．Continue to optimize the energy efficiency of each operating location, accumulating energy-saving measures every year and implementing ISO 50001 Energy Management Systems certification as we continue to explore the feasibility of various measures.
．Constructing solar power generation facilities in a series of operating locations, generating approximately 3.6 million kWh of green electricity in 2021
Risk Name / Explanation of Impact
Sea level rise may lead to the flooding of Acer’s own operating sites or those of its suppliers, leading to financial losses.
Response Measures/Identified Opportunities
．For locations that may be at risk of sea-level rise, adjust the storage location of inventory according to the risk level or move the entire location
In terms of our own operations, Acer’s key climate indicators for tracking at present include energy, carbon emissions, water resources, waste, and renewable energy. Currently, these are tracked through two major indicators: comparison to the base year and as a ratio against the number of employees. On the business side, Acer continues to review the environmental impact and performance of products at each stage of their life cycle by tracking the percentage of products certified as energy-saving, the percentage of post-consumer recycled plastics used in products shipped, the percentage of recycled materials used in product packaging design, and the carbon emissions of product transportation. Through this, we are able to continuously refine our operations and business in every possible way, making a concrete contribution to environmental sustainability.
Where products may not comply with regional low-carbon product specifications or standards or ones that may be promoted on the customer end in the future (e.g., product energy consumption standards, product carbon footprint information, etc.), this may result in an inability to sell in a particular region, meet public sector procurement specifications, or remain competitive in terms of products Considering current product sales and profitability, we are focused on commercial/Chrome notebook, desktop, and display products and quantifying financial impacts based on major sales markets in various regions of the world. With reference to the requirements of EU Green Public Procurement and the US’ Federal Acquisition Regulation, we have formulated the following scenarios to quantify financial impact. For more details on our climate-related risks and opportunities, please see Section C2 of our CDP Climate Change Questionnaire.
