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Energy and Climate Change

Identify the Climate Risk and Opportunity

According to World Meteorological Organization research, 2018 was one of the four years with the highest averagetemperature since meteorological records began. Average temperature has already risen by 1.1°C compared withpre-Industrial Revolution levels, and atmospheric carbon dioxide levels continue to rise. When the World Economic Forumpublished their report on global risk in January 2019, three of the top five risks in terms of probability of occurrence wererelated to climate change, as were four of the top five in terms of impact. Such results show clearly that the impacts ofclimate change on business, both internally and externally, cannot be overlooked.

The internationally signed Paris Agreement came into effect in November 2016, with signatory nations laying out progressive goals. As a global corporate citizen and leading ICT industry brand, Acer supports this agreement' goals of keeping global temperature increase within 2℃ of the temperature before the Industrial Revolution, and within 1.5℃ if possible. As such, both in the nations in which we operate and in our supply chain, we have actively implemented a plan oriented toward meeting Nationally Determined Contributions.

Through our Working Group on Risk Management, we continue to consider the potential impacts of climate change, forecasting the probability and potential impact of these risks, drafting contingencies and risk mitigation measures, and developing crisis management and early warning mechanisms to mitigate the effects of risks on operations.

In terms of major climate risks, natural disaster impacts, various national energy efficiency and product labeling regulations, consumer preferences, and investor concerns are expected to have a more significant impact than in previous years. In the short term, the most direct will be the new IEEE 1680.1:2018 standard for the US Electronic Product Environmental Assessment Tool(EPEAT), which is to formally take effect in 2019. This will encompass several new energy and carbon emissions-related compliance standards, including enterprise carbon footprint, product carbon footprint, and carbon emissions from product transportation, renewable energy use levels, fluorinated GHG emissions from semiconductors and panels, and energy management systems. The primary affected product categories include commercial desktop, notebook computer, and display tenders. Since the introduction of this new version of the standard is still in its early stages, we must continue observing commercial customers’ tender requirements to properly grasp its impact on revenues.

With regard to climate change derivedopportunities, we not only continue to pursue improvements to product energy efficiency, but also strive to integrate existing andnew business groups to create a unified low carbon, sustainable “Smart Strategy.” In addition, in our primary operating locations suchas Aspire Park, we have set up solar power generation stations, along with formally establishing ITS Inc. subsidiary which focuses onsmart transport solutions. This will enable us to make the most of the expertise of the ICT industry to help society and alldepartments of the Company reduce carbon emissions and make appropriate adjustments.

In addition, through internal assessments and situational analysis, we are able to relatively limit the financial impact of changes in physical infrastructure, policies, regulations, and markets brought about by climate change. We also create related business opportunities through innovation and product development. Through the continual strengthening of our capabilities through projects like a smart parking system, improvements to energy efficiency in our IT products, and development of renewable energy resources, we expect to be in even better control of our circumstances into the future.

 

Greenhouse Gas Inventory

Corporate GHG Inventory

Since 2011, Acer has contracted a third-party verification agency with both CDP and Taiwan EPA accreditation to undertake GHG Protocol Scope 1, 2, and 3 inspections of the emissions produced by staff business flights.In January 2018, US subsidiary GatewayInc. completed the sale of its North Sioux City plant, which accounted for more than 5% of the Group' emissions, exceeding thesignificance threshold set by the Group. We also follow the principles of the GHG Protocol, recalculating baseline-year emissionslevels with regard to structural changes, with the resulting recalculated baseline year emissions 32,144.42 tons.

Through verification, Acer Group found that our total Scope 1 emissions were 3,413.95 tons, with Scope 2 emissions 12,646.41 tonsby the market-based method and 18,777.30 tons by the location-based method. Together, our Scope 1 and 2 emissions totaled16,060.35 tons (market-based) or 22,191.25 tons (location-based), with Scope 1 emissions primarily from North American andEuropean natural gas usage and global combustion activity, and Scope 2 electricity usage down to approximately 78.7%. Totalemissions in 2018 were reduced by approximately 50.04% compared with the baseline year and a 4.48% reduction on 2017; percapita emissions were approximately 2 tons, about 7.83% lower than adjusted 2017 figures.

Annual Group Greenhouse Gas Emissions and Reduction Targets

 

In addition, in accordance with GHG Protocol Scope 3 principles, we inspect the emissions produced by staff business flights, product and service purchases, product shipping, and leased assets. Through inspections, we better understand how to control the carbon risks and opportunities in the value chain, which will further help in reduction strategies.

Scope 3 Greenhouse Gas Emissions Sources and Levels

 

Note1: Number of full-time staff at the end of 2018 is 7,338, with 699 contracted staff, for a total of 8,037.

 

Product Carbon Footprint Disclosure

In 2015, we took the lead in joining the Carbon Footprint Calculation Platform established by the Taiwanese EPA. With the cooperation of our major suppliers, we have set out a plan to broaden the carbon footprint inventory across indicator products, completing a carbon footprint report for the Chromebook C740. This cloud-based platform can effectively integrate many parties in the supply chain, providing timely calculation services and greatly reducing operating expenses, as well as accelerating inventory work.

This effort focuses on the office mode of the model, and the results have shown that carbon emissions across the product' lifecycle total approximately 123.70 kg. The raw materials and the using phases account for greater proportions of that figure, specifically 64.50% and 33.97% of total emissions respectively. The lightweight, quick-booting, quick-connecting nature of the product and the more streamlined components used therein (in comparison with ordinary notebooks) may help reduce the emissions at the raw materials and user ends.

Chromebook C740

Chromebook C740 Lifecycle Carbon Emissions

 

Greenhouse Gas Reduction and Policies

2050 Target: 80% reduction in Scope 1 and Scope 2 carbon emissions from the baseline year of 2009.

The carbon reduction target is in line withe the methodology proposed by Science-Based Targeting Initiative.

According to Acer' energy and climate strategy, we continueto prioritize energy efficiency at all of our operating locations,with use of green energy the next priority. Where appropriate,we use renewable energy power generation facilitiesalongside measures such as Renewable Energy Certificates(RECs) and carbon credits to support the development ofrenewable energy and climate protection plans.

 

Clean Energy Plan and Green Electricity

In addition to energy saving and the related carbon reduction, Acer is also seeking the opportunity to use renewable energy in Acer' facilities worldwide. Acer' Clean Energy Plan has been decided into 4 steps in different priorities. The first priority of clean energy is to have a green energy initiatives by using renewable energy (RE) in Acer' own facility if the RE condition is available. The second priority is to seek the green electricity in grids and to make advocacy to the governments if there is no green electricity available. The third priority is to seek the suitable regions to build RE facilities worldwide, especially those regions with larger carbon emission by Acer' facilities. The last priority is to procure Renewable Energy Certificates (RECs) or Carbon Credits when the other measures are not available.

Use Green Electricity
In terms of green electricity, in 2018 Acer' use of renewableenergy at its operating locations expanded to Poland, Turkey,and Sweden. Usage methods differ by region, with Taiwansetting up its own renewable energy generators, such as solarand wind generators; the US and Canada going through localGreen-e certified RECs, with a particular focus on wind power;and European countries such as Germany and Spainpurchasing renewable energy Guarantees of Origin (GOs). Inaddition, Thailand, Brazil, India and China each make use oflocal International Renewable Energy Certificates (I-RECs).Acer' US subsidiary also participates in the EPA Green PowerPartnership Program and other renewable energycertifications, leading to 100% of the Company' electricitycoming from wind, solar and other renewable energy sourceswithin the US. They have also continued to receive GreenPower Partnership certification. The above-mentioned RECstotal 14,314 MWh, while green electricity generatedby company-owned green generators and sold back to thelocal grid totaled 3,258 MWh. In total, Acer Group used asmuch as 17,572 MWh of green electricity, which iftaken only with REC usage figures accounts for 55.89% of ICT product-related operations and 42.5% of the Group' entireScope 2 electricity usage. 

 

Renewable Energy Facilities
In 2017, Acer built a solar power plant with a total of four ground and rooftop arrays in the Aspire Park, generating about 3.5million kWh of electricity each year. And the e-Enabling Data Center (eDC) in Taiwan is the first of our operations to install green energy facilities. The total self-generation amount is about 3.7 million kWh per year.

In total, Acer Group uses as much as 21,532.09579 kWh of green electricity certification globally, accounting for 48.07% of Scope 2 power usage. Into the future, we will continue to consider the accessibility, effectiveness, and institutional maturity of green electricity or renewable energy in our operating locations worldwide in an effort to achieve our mid-term goal of a 60% carbon reduction by 2020.

 

Supply Chain GHG Management

In addition to setting its own greenhouse gas reduction target, promoting energy conservation and carbon reduction in operations and products, Acer exerts its influence on brand enterprises. We form a supply chain greenhouse gas working group for major supplier partners, and regularly conduct carbon information tracking. To enhance the supplier' greenhouse gas management capabilities, we are also actively involved in carbon-related initiatives and programs to create a green, low-carbon supply chain.

Managing Climate Issues and Greenhouse Gases Emissions in the Supply Chain

Acer has been a member of the CDP program since 2008, and we have encouraged our suppliers to respond to CDP surveys regarding greenhouse gas emissions and policies in response to climate change. This information has then been made public or disclosed to members of the CDP Supply Chain Program.

We continued our participation in this program in 2018. The response rate to CDP Supply ChainProgram questionnaires among Acer suppliers increased from 86% to 91%, with overall supplychain performance at C level. Some key performance indicators, such as the ratio of Scope 1 toScope 2 emissions, climate risk analysis, carbon reduction target setting, and so forth are alsohigher than the global supplier average, and according to the CDP supply chain report, more than40% of our suppliers have adopted green electricity.In 2019, our CDP Supply Chain Program goalis to raise the overall average performance grade of our tier-one suppliers to B.

 

Acer Supplier CDP Response Rates

 

The vendor CSR scorecard continues to address tier one and tier two suppliers’ overall carbon management, carbon reduction results, and green energy usage status, amongst other items. These evaluations also include whether or not the group' greenhouse gases inventory and verification has been completed for the year and whether or not the supplier reached its intensity reduction target of 5% and made use of green electricity. Into the medium term, we will be focusing on this as a priority in supply chain management pertaining to production operations, as through this we will be able to boost the overall performance of our supply chain in responding to climate change. The critical suppliers’ carbon reduction goal which is in line with SBT methodology is also included in annual supplier' CSR scorecard in 2018.

In 2018, we continued to cooperate with the CDP China office, particularly with regard to organizing online courses for our China-based suppliers and increasing the capability of those suppliers to respond to climate change and stakeholder concerns. In meetings, we reiterated Acer' requirements on our supply chain for GHG management and reduction, along with the expanded use of green energy.

Supplier Training

In January 2015, the World Resource Institute announced new Scope 2 Accounting Guidance focused on the calculation and disclosure of renewable energy and green electricity in greenhouse gas inventories.

This aims to encourage businesses to adopt renewable energy sources as a means to reduce carbon emissions while providing guidelines for the follow-up disclosure thereof. In June 2015, we co-work with the Business Council for Sustainable Development of Taiwan to provide suppliers with free education and training in the new Scope 2 Accounting Guidance and they could get more clear definition of the green electricity and renewable energy also how to take these as key approached to reduce the carbon emission. We have also coordinated these efforts with our vendor CSR scorecard requirements in the hopes of further reducing overall supply chain carbon emissions.

In the January 2017 CDP Global Supply Chain Program report, particular note was made of Acer' concrete achievements in terms of long-term support and cooperation with suppliers to actively manage carbon and incorporate feedback from suppliers.

Acer foundation and Acer Inc. keep sponsoring the CDP event twice a year in Taiwan and invites our suppliers to join and learn more updated practices for carbon management and climate issues.In April 2018,CDP UK headquarters representativeswere invited, along with Taiwan'top-performing companies, to discussScience-Based Targets (SBT) and the TaskForce on Climate-related FinancialDisclosures’ Use of Scenario Analysis andRecommendations for Climate Risk Management. The aim of this was to help Taiwanese industrymeet the expectations of international investors and customers in terms of climate and carbonmanagement.

Acer not only shoulders our own responsibility to take part in global carbon reduction but has also required our major suppliers define SBTs by the end of 2018 in line with international requirements to find paths to carbon reduction. In addition to inviting a consultant from the Industrial Technology Research Institute (ITRI) to give a talk on SBTs at our 2016 Supplier CSR Communication Meeting, in December 2017 we also invited an expert on carbon reduction from the ITRI to conduct a workshop on SBT carbon reduction target setting and the use of related tools for suppliers, further demonstrating our commitment to low-carbon, sustainable development throughout our supply chain.