Climate Risks, Opportunities and TCFD | ACER ESG
Climate Risks, Opportunities and TCFD
Since 2020, Acer has 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.
Optimized the TCFD management
In 2023, we released our first TCFD Report. We believe by adopting the TCFD recommendations, we have strengthened our efforts in climate governance and enabled us to identify and respond to climate risks and opportunities and gain a deeper understanding of the impact of our operations and products on the climate. We have thus formulated relevant strategies and adaptation measures accordingly to reduce climate risks and enhance our resilience against climate change. We have also actively embraced the global trends of a green, low-carbon economy and business model transformation driven by climate change. We continuously improve energy efficiency, utilize renewable energy, integrate existing and new business groups, develop low-carbon and sustainable strategies, and propose specific products and solutions to create ESG value and enhance our competitiveness.
For detail, please see our CDP Climate Change Questionnaire , and Acer TCFD report.
Governance
To proactively identify and manage internal and external operational risks, and effectively control these risks through appropriate assessment and handling procedures, Acer has established the Risk Management Committee (RMC) to assist the Board of Directors in risk governance.
The Board of Directors/Risk Management Committee are the highest authorities responsible for the Company's risk management which promotes and implements the Company's overall risk management policy in accordance with the overall operating strategy and business environment to ensure effective risk management. Under the committee, there is the Risk Management Executive Committee (RMEC) and the Risk Management Working Group (RMWG), which are responsible for organizing committee meetings and handling the planning, preparation, and execution of matters related to the organization rules.
As for the climate-related issue, we integrate our climate-related risk management into our risk management policies and operating procedures. Acer Risk Management Executive Committee is responsible for approving/declaring the environmental risk, risk management priorities, assessment results and related response measures, and supervises the continuous improvement of risk management and performance. The executive committee is composed of the top executives of each business unit/functional organization at the headquarters with the top of the auditing department as an observer to supervisor, managing risks including strategic risk, operational risk, financial risk, disaster risk, and climate change, and reporting to the Risk Management Committee and Board of Directors at least once a year. Under the Risk Management Executive Committee, the Risk Management Working Group is the unit responsible for introducing the TCFD climate risk assessment framework and conducting climate risk identification, climate scenario and operational impact assessment, formulating climate risk prevention and mitigation measures based on the assessment and report to the Risk Management Executive Committee.
Strategy
Acer's risk management team takes the potential impact of climate change into overall operational considerations, evaluates the probability of risk occurrence and impact, and formulates climate risk prevention and mitigation measures. For climate change scenarios, Acer referred to relevant international carbon management trends, TCFD recommendations, and reports and information released by other relevant domestic and global institutions and introduced physical and transition risk scenarios such as RCP 2.6, RCP 8.5, IEA NZE 2050, and NDCs (Taiwan). Acer identified short-, medium- and long-term climate change risks with considerations in its business characteristics and evaluated the potential impact of each business unit when transition risks and physical risks occur based on the concept of materiality.
When it comes to opportunities brought about by climate change, Acer held climate-related identification workshops and distributed climate risk prioritization by materiality surveys for relevant units’ assessment and identified developing and/or increasing low-carbon goods and services. With R&D and innovation, Acer can develop new products and services and other related opportunities, and continuously improve the product energy efficiency, build solar power stations to increase the share of renewables electricity usage, provide professional knowledge and experience in the ICT industry, and ensure the society and various departments of Acer can achieve the energy conservation and carbon reduction goals or carry out corresponding transformation and adjustment methods to expand the Group's business and implement the daily management of climate issues.
Major Cimate Risk Matrix
Climate Risks, Opportunities and Our Response Measures
Risk Name / Explanation of Impact
Regulation and Policy
Increased Costs of Greenhouse Gas Emissions / Medium-term Risk
Medium-term Risk
Risk Name / Explanation of Impact
Trends in carbon valuation are gradually becoming clear (such as carbon taxes and carbon fees). The European Union Carbon Border Adjustment Mechanism (CBAM) is set to be enter a test period from October 2023 and be officially implemented in 2026. Taiwan's Climate Change Response Act is expected to impose carbon fees in 2024. Greenhouse gas emissions exceeding the core quota will incur greenhouse gas emissions costs, and may cause suppliers to pass on these costs and adjust pricing, affecting product competitiveness.
Response Measures/Identified Opportunities
Acer shoulders the mission of being a leading brand and promises to achieve net zero emissions by 2050, increase the share of renewables in energy consumption to 100% by 2035 and set Science Based Targets (SBT) aligned with the 1.5°C carbon reduction pathway. By 2030, Acer aims to reduce carbon emissions by 50% in organizational operations compared to 2019, and reduce the value chain emissions by 35% compared to 2020. In addition, by 2025, the Acer personal computer product average energy consumption will be reduced by 45% compared to 2016 and the computer and displays product will reach to 20-30% post-consumer recycled plastic material content.
Increased Demand for and Regulations Related to Sustainability / Medium-term Risk
Medium-term Risk
Risk Name / Explanation of Impact
Emerging sustainable product design specifications such as the Ecodesign for Sustainable Products Regulation, climate disclosure requirements (e.g. Taiwan listed company sustainability roadmap, EU Corporate Sustainability Reporting Directive), and renewable energy or environment-related regulations and policies may lead to increased operating costs for companies due to compliance with relevant regulations.
Response Measures/Identified Opportunities
Acer Corporate Sustainability Committee (CSC), chaired by the Chairman and CEO, with the ESG Office serving as the Executive Secretary. The Corporate Sustainability Committee establishes working groups on corporate governance, risk management, innovation and product lifecycle, environmental management, and supply chain management. These groups address significant sustainability issues across departments, facilitating communication, coordination, and planning for important issues. They also execute and monitor action projects to track progress and effectiveness.
Regulations and Impact on Existing Products and Services / Short-term Risk
Short-term Risk
Risk Name / Explanation of Impact
Additional requirements from environmental laws, energy labels (e.g. Energy Star, EPEAT, TCO, etc.), life cycle assessments, and product carbon footprint reports worldwide may increase Acer's operating costs and may cause suppliers to adjust quotations due to the addition of regulations, passing along increases in R&B and procurement costs.
Response Measures/Identified Opportunities
As environmental labeling standards are revised, Acer continues to track and collaborate with ODMs, evaluating and responding to new standards early to ensure that we have sufficient time to smoothly introduce changes to our products. For example, the revision of EPEAT program includes four modules: Climate Change Mitigation, Sustainable Use of Resources (or Circularity), Reduction of Chemicals of Concern, and Corporate ESG Performance, which will be applied to all EPEAT product categories and starting with Computers and Displays, Imaging Equipment, Mobile Phones, Servers and Televisions.
Market
Increased Raw Materials Costs / Medium-term Risk
Medium-term Risk
Risk Name / Explanation of Impact
Increased demand for renewable energy facilities/equipment, low-carbon circular materials (such as PCRs) due to climate change may result in increased productions costs, affecting the price of profitable products and potentially impacting revenues.
Response Measures/Identified Opportunities
Acer supports the concept of resource recycling, but also actively uses post-consumer recycled (PCR) Plastics in its products. By 2023, 18.8% of post-consumer recycled plastic were used in our computer and display products. Over the period of 2020 to 2023, we have incorporated post-consumer recycled plastics into more than 40 million units of our computer and display products.
Technological
Costs of Low Carbon Technology Transition / Short-term Risk
Short-term Risk
Risk Name / Explanation of Impact
The electronics industry chain faces technical challenges in low-carbon transition, from the development and use of low-carbon materials and optimization of system energy efficiency, to the development of electric and hydrogen energy, carbon-negative technologies, and so on. International brands will also require their suppliers to invest more in addition to the cost of their own low-carbon transition, resulting in increased capital capital due through low-carbon technology R&D.
Response Measures/Identified Opportunities
Acer supports the concept of resource recycling, but also actively uses post-consumer recycled (PCR) Plastics in its products. By 2023, 18.8% of post-consumer recycled plastic were used in our computer and display products. Over the period of 2020 to 2023, we have incorporated post-consumer recycled plastics into more than 40 million units of our computer and display products.
Failed Investments in New Technologies / Long-term Risk
Long-term Risk
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
Continuous innovation is a core value for Acer, as through it, we can gain a competitive edge. Our patent strategy is to invest resources in continuous innovative R&D, building a patent network and demonstrate the benefits of our patents while also establishing a set of strict patent measures to protect our R&D achievements. As of December 2023, Acer has secured a total of 7,625 valid issued patents in various countries around the world, with at least 3,400 patents issued in Taiwan and more than 1,400 patents issued in the United States.
Physical Risk
Long-term
Rising Average Temperatures / Long-term
Long-term Risk
Risk Name / Explanation of Impact
According to the IPCC’s AR6 report, global warming has led to an inevitable rise in temperature by 1.5°C between 2021 and 2040. The average temperature rise will lead to a significant increase in air conditioning system power consumption at Acer's cloud server rooms, offices, and supply chain product assembly sites, not only consuming more power, but also leading to increased carbon emissions. In addition, Acer's product assembly plants may be affected by higher demand, unstable electricity infrastructure, insufficient backup capacity, local government power limiting measures, or large-scale power outages, resulting in adverse impacts on product shipment and finances.
Response Measures/Identified Opportunities
We continue to implement the energy efficiency program including:
- Implementing energy-saving projects
- Setting the RE100 goal by 2035
- Establishing our solar PV power generators
- Investing in renewable energy development, and exploring the feasibility of new power-saving measures
Climate-Related Opportunities
Profile | Opportunity Item and Impact Description | Response Measures and Action Plans |
|---|---|---|
Development and/or Addition of Low-Carbon Goods and Services | Medium-to-Long term
Facing global low-carbon transitions and trends, developing or enhancing the application value of low-carbon products or related low-carbon services, can help boost business revenue | As a human-centric company, our mission is clear – driving the development and innovation of "Conscious Technology" with humans at heart and the planet in mind. Acer employs the concept of circular economies and strives to reduce the impact of our products on the environment throughout their life cycles. In the design phase, we plan and decide on models and proportions of post-consumer recycled plastics, carefully selecting suppliers. For packaging materials, we use environmentally friendly materials and reduce packaging volume and weight by simplifying packaging and using uniform packaging dimensions and printed products. During the shipping phase, we continue to implement an optimized ground operation model at production sites through close cooperation with logistics providers. In usage, we have introduced "Modern Standby," based on the US Energy Star standard, as the basis for product design, providing a power management model that continues to deliver more products with low energy consumption to consumers. In product recall, we continue to implement recycling programs around the world and support Individual Producer Responsibility (IPR). We are committed to working with stakeholders such as governments, consumers, channels, and retailers to share responsibility for e-waste management and recycling. |
Use of Low-Carbon Energy | Medium-to-Long term
By switching to low-carbon emission energy to replace coal-fired electricity and reducing energy consumption in production and delivery, we can reduce carbon emissions and bolster our resilience to climate change and related regulations | The use of low-carbon energy not only meets the expectations of institutional investors and stakeholders regarding carbon reduction trends, but also strengthens our resilience against climate change and regulations and enhances corporate ESG image and brand value. In 2021, we announced that we had joined the RE100 initiative to achieve our goal of 100% renewable electricity use in our operations by 2035. We look forward to expanding our investment in green energy and energy storage systems through our supply chain partnerships and to launching related energy storage products.
To further reduce carbon emissions in shipping, since 2022, we have been testing the use of Sustainable Marine Fuel (SMF). In 2023, we enhanced our partnership with logistics providers, KUEHNE+NAGEL and Expeditors, to significantly decrease carbon emissions from using SMF by 12 times compared to 2022, resulting in an almost 4% reduction in global maritime transportation emissions.
Furthermore, starting in 2023, Acer began promoting the transportation of notebook computers using electric vehicles in Chongqing, with an initial focus on commercial models. By 2023, 52% of commercial notebook computers were already being delivered locally in Chongqing using electric vehicles. |
Changes in Consumer Preferences | Short-Medium-term
As low-carbon transition has risen as a trend, customer demand for energy efficient products and corporate climate resilience has increased. A prompt focus on high-efficiency product development and marketing can enable us to gain a competitive advantage, thus increasing revenues | As net zero emissions have become a major issue driving international policy and industrial development, corporate customers tend to look for products and services with less environmental impact, as well as suppliers with the same awareness, and continue to incorporate green procurement practices into their assessment criteria for orders. Preference for green products is also gradually increasing, and this is reflected in product purchases.
As such, we continue to strengthen communication and disclosure around the environmental performance of our products. At the product design end, in addition to complying with legal and regulatory requirements for product sales in all regions, Acer continues to improve product energy efficiency, reduce the use of hazardous chemicals, facilitate recycling, and extend product life, all of which demonstrate our commitment to optimization of product design. Ultimately, we communicate and disclose the environmental performance of our products to consumers through various environmental labels. |
※Risk and opportunities impact period definition: short-term: 0-3 years, medium-term: 3-8 years, long-term: 8-28 years
Climate-related Scenario
In order to assess the financial impact of climate impact, Acer sought external cooperation to develop financial quantitative and situational analysis, to carry out an assessment of the potential financial impact of Acer's climate-related transformation risks, physical risks, and climate opportunities to accurately measure the amount and distribution of resources to be invested.
Acer's climate scenarios make reference to climate scenarios published by international organizations, including RCP 2.6 from the Intergovernmental Panel on Climate Change (IPCC), RCP 8.5, NZE 2050 by International Energy Agency (IEA), and Taiwan’s Nationally Determined Contributions (NDCs Taiwan).
Physical Climate-related Scenario
Scenario Used: RCP 2.6 & RCP 8.5
Coverage: Company-wide
Parameters, assumptions, analytical choices
We identified the risk caused by changes in physical climate parameters which include an increase in extreme weather events—heavy rainfall and an increase in average temperature. The risk of an increase in extreme weather events is based on the IPCC 1.5DC report in 2018, under the 2°C scenario, in the future, there will be 1.2 Category 4 typhoons (wind speed over 58m/s, Category 17 gust) and 1.2 Category 5 typhoons (wind speed above 70m/s, 17-level gust) every year in the world. As for the risk of an increase in average temperature, based on the data from the Taiwan Climate Change Projection Information and Adaptation Knowledge Platform (TCCIP), under the RCP2.6 scenario, the annual average daily temperature in Taiwan may increase by 0.64~1.64°C from 2021 to 2040; under the RCP8.5 scenario, in 2036~2065, the annual average daily temperature in Taiwan (headquarters) may increase by 0.64~1.64℃ and 1.5~2℃.
Focal questions and the results
We focus on the risk of the increase in the global average temperature because it will lead to a significant increase in air conditioning system power consumption at Acer's cloud server rooms, offices, and supply chain product assembly sites. We identify it as the main risk is because it almost certain to happen, and will increase not only the amount of electricity consumption but also carbon emissions that lead to a higher cost of the operational fee. In addition, Acer's product assembly plants may be affected by higher demand, unstable electricity infrastructure, insufficient backup capacity, local government power limiting measures, or large-scale power outages, resulting in adverse impacts on product shipment and finances. For detail of the financial impact, please see our CDP Climate Change Questionnaire.
Transition Climate-related Scenario
Scenario Used: IEA NZE 2050 & NDC (Taiwan)
Coverage: Company-wide
Parameters, assumptions, analytical choices
We identified the risk caused by changes in transition climate parameters and focus on the two risks of increased sustainability-related demand and regulations and increased costs of greenhouse gas emissions. As for renewable energy, under the International Energy Agency (IEA)NZE 2050 scenario, renewable energy will become the main energy source. By 2050, nearly 90% of power generation will come from renewable energy. These governments may drive companies to use renewable energy through regulations, such as the Renewable Energy Development Regulations in Taiwan, or increase the non-renewable energy fee. In addition, global carbon tax, such as Carbon Border Adjustment Mechanism (CBAM), will be the requirement for product export to the EU. Countries such as the USA, Japan, and Taiwan will introduce their internal carbon trading scheme to control the total emission under the national target. According to the IEA NZE scenario, the prices of the developed economies with net-zero commitments such as the EU and the US, and the carbon price is expected to be US$140 per ton in 2030. The emerging markets with net-zero commitments such as China, and the carbon price is expected to be US$90 per ton in 2030.
Focal questions and the results
We focus on the risk of emerging carbon emission-related regulations because of the increasing demand for and regulations (e.g. carbon taxes, carbon fees) on greenhouse gas emissions after the Paris Agreement may lead to a large cost on the product and a greater impact on our business. For example, the European Union Carbon Border Adjustment Mechanism (CBAM) is set to enter a test period from October 2023 and be officially implemented in 2026. The US Clean Competition Act and Taiwan's Climate Change Response Act are expected to impose carbon fees in the near future. Greenhouse gas emissions exceeding the core quota will incur greenhouse gas emissions costs, and may cause suppliers to pass on these costs and adjust pricing, affecting product competitiveness. For detail of the financial impact, please see our CDP Climate Change Questionnaire.
Risk Management
Acer incorporates climate risk identification and assessment into the enterprise risk management (ERM) process, through the three lines of defense of the risk management organization, self-assessment and process improvement of each business unit, procedural guidance and legal compliance of each support department, and the audit management procedures of internal audit unit. We integrate the ERM implementation with the daily operating procedures of each department/unit and the Company's business targets, and integrate the ESG and climate factors into the decision-making process. Through the PDCA cycle, we conduct regular reviews on the effectiveness of the risk management plan and the improvement possibility during the working group meeting for continuous adjustment/improvement.
Climate Change Risk Identification Procedure
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.
Metrics and Targets
Acer shoulders the mission of being a leading brand and promises to achieve net zero emissions by 2050, increase the share of renewables in energy consumption to 100% by 2035 and set Science Based Targets (SBT) aligned with the 1.5°C carbon reduction pathway. By 2030, Acer aims to reduce carbon emissions by 50% in organizational operations compared to 2019, and reduce the value chain emissions by 35% compared to 2020. In addition, by 2025, the Acer personal computer product average energy consumption will be reduced by 45% compared to 2016 and the computer and displays product will reach to 20-30% post-consumer recycled plastic material content.
