Core Framework
According to Working Group I’s report in the Sixth Assessment Report of the Intergovernmental Panel on
Climate
Change (IPCC), the decadal average temperature of the Earth's surface between 2011 and 2020 is about
1.09°C higher
than the average temperature of the first 50 years of industrialization between 1850 and 1900, which
clearly
indicates that it is necessary to actively aim for net zero carbon emissions/carbon neutrality in order
to control
global warming, which must not exceed 1.5°C.
In the face of highly uncertain climate risks and the global race towards net zero carbon emissions, the
Financial
Stability Board (FSB) has proposed a framework for the Task Force on Climate-Related Financial
Disclosures (TCFD) to
help companies manage climate change-related issues
We know that the risks and opportunities that climate change brings to a company should no longer remain
at the
basic stage of identification, and that the linkage between assessment and managed operation strategies
is one of
the most important issues for a company’s sustainable operation. Therefore, we have introduced the TCFD
framework to
analyze risks and opportunities in terms of policies and regulations, market and technological changes,
and goodwill
and substantive risks, and to develop adaptation and mitigation strategies, disclose financial
information related
to climate change, and improve communication with stakeholders.
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Framework
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Strategies and Actions
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Governance
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• Board of Directors: review sustainability
management strategies, major action plans, risk management policies, annual
performance results, etc.
• ESG Committee: The management committee
responsible for climate-related issues at the highest level is the ESG Committee,
with the Chairperson and the SBU Presidents serving as the steering committee. The
head of every unit is responsible for the operations of the committee under their
purview, and the members of each committee sub-group include representatives from
every department in every operating unit of the company; they are responsible for
confirming the management standards and implementation of ESG issues, reviewing
their organization’s performance objectives, monitoring implementation, and more.
They report to the board of directors once a year.
• Energy Conservation and Carbon Reduction
Subcommittee: The subcommittee manages climate-related issues, reviews
the management of key performance indicators, and sets short-, medium-, and
long-term goals, including improving energy efficiency, evaluating the use of
renewable energy, and managing carbon emissions to implement green management.
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Strategy
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• Based on the TCFD framework, we have identified 5 opportunities and 10 risks in
the short, medium and long term.
• We have used three different climate scenarios, RCP2.6, RCP4.5-6.0 and RCP8.5, to
assess the potential financial impact of climate change on operations.
• Guided by the ESG Policy and the Environmental Resources Policy, we plan and
implement projects to mitigate climate change and pay attention to trends in climate
action to continue to move toward carbon neutrality.
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Risk
Management
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• Based on the scope and status of the impact of climate change, the substantive and
transition risks are scored according to their frequency and severity, and are
classified into different quadrants according to their scores. For items with high
frequency and severity, management measures are formulated through interdepartmental
discussions.
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Metrics &
Targets
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• Climate change related management indicators:
- GHG management: Maintain the intensity of GHG
emissions per unit of revenue below 11 by 2023 and below 10 by 2025.
- Water resources management：Maintain the
intensity of water resource consumption per unit of revenue below 300 by 2023 and
below 290 by 2025.
- Energy management：Maintain the intensity of
electricity consumption per unit of revenue below 17 by 2023 and below 16 by
2025.
• The relevant emission information has been carried out in accordance with The
Greenhouse Gas Protocol and ISO 14064-1- Greenhouse gases, and certificated by a
third party to measure the impact of climate change on the Unimicron's
operations.
• We have set GHG reduction targets for 2025, 2030 and 2050 to respond to climate
change and GHG reduction regulations.
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Risk Identification
The relevant departments in the ESG Committee identify and analyze the potential climate change risks
and opportunities within their business areas. Based on the occurrence probability (7 levels) and
severity (5 levels) of each risk and opportunity, a matrix is drawn to capture significant risks and
opportunities, and management methods are developed to reduce, transfer or avoid potential impacts. The
results of the matrix analysis show that there are three risks having a position of high probability and
high impact, that is, total amount control and emissions trading, average rainfall change, and the
uncertainty of new regulations, respectively.
The carbon taxes, energy/fuel taxes and renewable energy regulations are considered as with medium
probability and high impact. The four risks of extreme temperature change, rainfall pattern and
distribution change, extreme rainfall and drought, and average temperature change are considered as with
high probability and medium impact. In terms of opportunity points, those with relatively higher impacts
or potential are production processes, low-carbon energy, water resource use, alternative or diversified
resources, and logistics.
Unimicron Climate Change Risk Matrix
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Source of Risk
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Type
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Possible occurrence Time
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Impact
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Measures
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High Probability X High
Impact
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Total amount control and emissions trading
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Transition
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Medium term
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Shenzhen City, Mainland China, took the lead in
launching carbon emissions trading in June 2013. Unimicron (Shenzhen) began to
join the Shenzhen carbon trading mechanism in 2014.
As we deal with more stringent carbon caps in the future and a carbon trading
market that has grown more sophisticated since last year, the cost of carbon for
our operations will increase if our operations and capacity increase in the
future. If the scale of our operations and production capacity increase in the
future, the carbon cost of operation will rise if our quota cannot cover our
total carbon emissions.
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• Implemented inventory and continuous monitoring management in accordance with ISO
14064-1:2018 - Greenhouse gases standard to reduce carbon intensity.
• Continuously expand R&D ability and cooperate with equipment and material
manufacturers to develop low-carbon technologies.
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Average rainfall change
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Physical
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Short term
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Rainfall is mostly concentrated in some areas, leading
to water shortages.
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• In the use and retention of water resources had been evaluated at the initial
stage of establishing each of Unimicron's facilities. Not only set up Storage tanks
but the water storage capacity of each regional reservoir and the water consumption
status of each plant is monitored and managed during normal times.
• Convene contingency meetings during drought.
• The emergency response water dispatch team is in charge of water trucks, water
tanks, water sources, and other matters regarding water resources dispatching, to
ensure uninterrupted operations.
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The uncertainty of new regulations
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Transition
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Medium term
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Climate
Change Response Act and Renewable Energy Development Act.
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• Continued attention to draft regulatory changes and assessments.
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Medium Probability X
High Impact
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Carbon tax
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Transition
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Medium term
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• In the future, carbon fees will be imposed through Taiwan’s new Climate Change
Response Act, which will limit capacity expansion and increase operating costs.
• The installation and operation of carbon reduction equipment result in increased
operating costs.
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• Implemented inventory and continuous monitoring management in accordance with ISO
14064-1- Greenhouse gases standard to reduce carbon intensity.
• Continuously expand R&D ability and cooperate with equipment and material
manufacturers to develop low-carbon technologies.
• Set carbon reduction targets, continuously evaluate and plan carbon offset
strategies to achieve carbon neutrality.
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Energy
tax/
Fuel tax
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Transition
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Long term
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Energy
tax/fuel tax would increase the costs of operation.
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• Continuously pay attention to the changes in laws and establish measures to
fulfill compliance requirements.
• Upgrade equipment to improve energy efficiency.
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Renewable energy regulations
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Transition
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Medium term
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The
installation/use of renewable energy in Taiwan Facilities will increase the
company's capital expenditure as required by the renewable energy development
regulations.
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• Planning renewable energy and evaluating Solarstrom according to demand by 2030.
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High Probability X
Medium Impact
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Extreme
temperature
change
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Physical
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Short term
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As the
rising average temperature in the summer, to maintain the temperature and
humidity conditions in the plant, more air conditioning systems need to be
turned on to meet the production demand.
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• Improve the efficiency of the air conditioning system and add inverters with
control, reducing energy use and reducing greenhouse gas emissions.
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Rainfall
pattern
and distribution
change
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Physical
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Short term
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Rainfall ismostly
concentrated in some areas, leading to water shortages.
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• Regularly monitor water shortage tendencies and develop contingency measures.
• The emergency response water dispatch team is in charge of water trucks, water
tanks, water sources, and other matters regarding water resources dispatching, to
ensure uninterrupted operations.
• The AWS International Water Stewardship Standard was introduced for sustainable
and systematic water management.
• Water usage efficiency can be increased in two major aspects: production processes
and equipment upgrades.
• A project that recycles water from production line equipment improved the water
recycling and reuse rate.
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Extreme
rainfall
and drought
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Physical
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Short term
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If the
number of typhoons landfalling in Taiwan decreases and the number of days
without rainfall increases, water shortages will occur.
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• Regularly monitor water shortage tendencies and develop contingency measures.
• The emergency response meeting shall be held during the drought period.
• The emergency response water dispatch team is in charge of water trucks, water
tanks, water sources, and other matters regarding water resources dispatching, to
ensure uninterrupted operations.
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Average
temperature
change
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Physical
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Short term
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As the
rising average temperature in the summer, to maintain the temperature and
humidity conditions in the plant, more air conditioning systems need to be
turned on to meet the production demand.
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• Improve the efficiency of the air conditioning system and add inverters with
control, reducing energy use and reducing greenhouse gas emissions.
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Opportunity Identification
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Type
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Possible
occurrence
Time
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Impact
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Measures
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High Probability X Low
Impact
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Production processes
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Long term
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• The reduction of the product defect rate could reduce the cost of scrap
• Reduce the consumption of other chemicals that could reduce the cost of chemicals
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• Implementing a circular economy to reduce carbon emissions and use of energy
resources
• Use new Chemicals in electroplating process
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Low-carbon energy
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Medium term
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Changing the fuel of boilers from
fuel oil, diesel, etc. to cleaner natural gas that can effectively reduce the GHG
emissions generated
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• We will continue to replace energy-consuming equipment and improve energy
efficiency by 2025, and we plan to use renewable energy and solar photovoltaic
facilities by 2030. We will continue to pay attention to the development of laws and
policies to implement improvement plans to reduce carbon and save energy.
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Water resource use
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Short term
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Increase the efficient use of water
resources that can reduce dependence on raw water
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• To recover water for manufacturing, monitor the quality of recovered water and
reuse it in related systems to improve the recycling rate of water resources
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Medium Probability X
Medium Impact
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Alternative or diversified resources
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Short term
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Improve the climate resilience and risk tolerance of
the supply chain to stabilize the supply chain
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• Assess and manage procurement risks through cross-departmental Supply Chain
Management Subcommittee
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Logistics
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Short term
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Increase productivity by reducing the period of raw
materials and equipment logistic
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• Route optimization
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Climate Transition Scenario Analysis
Based on the results of the climate risk identification, Unimicron uses three different warming
scenarios, namely RCP2.6, RCP4.5-6.0 and RCP8.5, to make parametric assumptions and financial impact
estimates for the transition and physical risk factors. Among them, the risk factors are assumed to
include carbon tax and the market. We make simulations with the changes in temperature and rainfall. In
the simulations of all three scenarios, the financial impacts are mainly in the form of cost increase
and revenue decrease.
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Item
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Scenario
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Transition Risk
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RCP2.6
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RCP4.5-6.0
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RCP8.5
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Carbon Tax/
Carbon
Pricing (NT$)
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NT$ 280~2,800 /t-CO2e
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NT$ 100-300 /t-CO2e
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-
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Market share (%)
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Decrease 1%-5%
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Decrease 1%-5%
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-
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Physical Risk
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Degree
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+0.3-1.7℃
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+1.6~2.5℃
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+1.9~3.0℃
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Raining (mm/day)
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4.54 mm/day
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4.55 mm/day
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4.42 mm/day
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The Aspect of Financial
Impacts
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• Increased costs due to carbon tax
• Lower revenue due to products beings replaced with low-carbon products
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• Increased costs due to carbon tax
• Lower revenue due to products beings replaced with low-carbon products
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• Extreme weather causes damage to plant and equipment, thereby disrupting
operations
• Extreme weather causes supply chain disruptions
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Note 1: The Representative Concentration Pathways, (RCPs) are a method for capturing those
assumptions within a set of scenarios.
Note 2: RCP2.6 corresponding to a mitigation scenario with a very low radiative forcing level that
peaks at 3 Wm-2 (490 ppm CO2 equivalent) by 2100. The scenario is based on the
assumption that countries strictly control warming and actively reduce GHG emissions.
Note 3: RCP4.5~6.0 representing a medium stabilization scenario without overshoot pathway to 4.5
Wm-2~6 Wm-2 (650~850 ppm CO2 equivalent) at stabilization after
2100. On behalf of countries attempting to meet GHG reduction targets, GHG emissions remain
middle-to-high scenarios.
Note 4: RCP8.5 corresponding to a very high emission scenario with rising radiative forcing pathway
leading to 8.5 Wm-2 (~1,370 ppm CO2 equivalent) by 2100.
Note 5: Decrease in product market share due to increasing market expectation and demand for green
products.
