▶️Climate Change Strategy and Management
Task Force on Climate-Related Financial Disclosures (TCFD)
In the face of the global warming crisis, as a global corporate citizen, WPG Holdings supports and responds to the Paris Agreement, striving to reduce greenhouse gas emissions and setting a vision for low-carbon sustainable development. We are committed to minimizing the impact of our operations on the ecological environment and consider compliance with laws and regulations as a basic requirement.
WPG Holdings has made reference to recommendations on climate change-related financial disclosures issued by the Task Force on Climate Related Financial Disclosures of the Financial Stability Board (FSB) of the United Nations and conducted the current situation analysis, climate risk and opportunity identification, and scenario analysis of climate change-related financial disclosures, which are described in the following four scopes:
1.Governance
On climate issues, the Board of Directors of WPG Holdings is the highest supervisory unit to coordinate the Company’s overall climate strategy and oversee the implementation of climaterelated risk management by relevant units. There are five functional groups under the Sustainability Committee, with the Chief Sustainability Officer as the convener responsible for managing and overseeing the implementation of relevant climate risks and opportunities. The convener of the Sustainability Committee also reports regularly (at least once a year) to the Board of Directors on the progress of corporate sustainability promotion, including the implementation results and future planning of climate-related issues. For the implementation status, please refer to 1.2.2 of this report.
2.Strategy
With reference to the TCFD guidelines, we identify 5 climate change risks and 5 opportunities of WPG Holdings through workshop discussions and assessments of climate related issues. The impact period of climate risk is divided into short-term (1~3 years), mid-term (3~10 years), and long-term (more than 10 years).
- Climate Change Management Policy and Response Actions
In response to the key risks and opportunities caused by climate change, WPG Holdings has established the following management plans to address the issues of low-carbon operations and promotion of green value chain:
1. Low Carbon Operations
The management of greenhouse gases, energy, water resources and waste is divided into the following two main areas according to the business structure of WPG Holdings:
● Office Areas: In the short term, relocating to a new building with a green building label to reduce energy consumption and office operating costs. In the long term, gradually purchasing energy-saving equipment to reduce office energy use. Meanwhile, evaluating the consumption of green power and the purchase of RECs to mitigate the carbon emissions at the office areas step by step.
● Logistics Warehousing: Build intelligent monitoring equipment and promote the complex transportation mode.
2. Green Value Chain
● Cleantech Development: Develop clean technology-related product solutions with customers to promote green energy-related semiconductor component business opportunities.
Climate Change Scenario Analysis
The global average temperature rise controlled within the range of 1.5°C is the goal for all of the people. However, there is still a considerable gap between various countries’ policies and this goal. In order to respond to the risks and impacts caused by various possible climate paths in the future, WPG Holdings, through the climate change scenario analysis, assessed 2 physical risks (flooding disasters and increasing global average temperature) and 1 transformation (pass-through of the carbon emission costs for transportation of commodities), as well as the risk impacts under various scenario hypotheses. Meanwhile, it also formulated appropriate response strategies to mitigate the potential impacts posed by climate risks. The risk scenarios, analysis factors and assessment results are disclosed as follows:
In recent years, extreme rainfall events have become more frequent and have caused largescale flooding events. As the leading distributor of semiconductor components in Asia Pacific, WPG Holdings has set up operating locations and logistics warehouses globally. However, due to the lack of universally comparable and accurate global risk mapping information, the 2023 assessment primarily referenced the flood disaster risk maps published by Taiwan's National Science and Technology Center for Disaster Reduction (NCDR) on their Climate Change Disaster Risk Adaptation Platform. The priority was to simulate scenarios for the Taiwan region and assess the impacts on various sites under different climate scenarios. The scenarios were based on the base year and RCP 8.5 climate scenario, with the base year assumed to follow the RCP 2.6 risk pathway.
The most direct impact of the global mean temperature rise is the growth of energy demand for air conditioning, and the most important energy use in the operation of WPG Holdings is electricity for air conditioning. The Company simulates the temperature change of each location under different global average warming environments and the warming trend under different scenarios (RCP 2.6, RCP 4.5, RCP 6.0, RCP 8.5) by referring to the Networking for Greening the Financial System (NGFS) and estimates the occurrence time and financial impact of global mean temperature increase through electricity usage and average electricity cost of each location.
In order to reduce Greenhouse Gas emissions, the trend in recent years has been to levy carbon fees or carbon taxes on carbon emissions, forcing manufacturing companies to begin to focus on greenhouse gas reduction. Although WPG Holdings is not a large greenhouse gas emitter, but the upstream and downstream logistics and transportation process may also generate a large amount of Greenhouse Gas emissions. If the future for the transport of Greenhouse Gas emissions need to begin to collect carbon fees, it may face the logistics manufacturers due to the imposition of carbon fees and pass on costs, resulting in increased costs of transportation. Based on the NGFS model, the changes in carbon costs under current policies, NDCs, and 2050 Net Zero emissions scenarios were analyzed; it was evaluated that if logistics manufacturers do not transition their transportation equipment, and the government starts to impose carbon fees on greenhouse gases generated by transportation sector in order to control Greenhouse Gas emissions, the logistics and transportation costs in this scenario will grow significantly.
3.Risk Management
The climate change risk management procedures of WPG Holdings have been integrated into the general risk management. For details, please refer to 2.2.2 herein. By identifying risks, it defined six major risks, including environmental risks (business interruption caused by natural disasters, etc.) and has established the emergency response procedures to address business interruption. The climate risk management process consists of three major steps, namely, “Identification and Assessment,” “Monitoring and Response,” and “Report.” Further, WPG Holdings has started to conduct Greenhouse Gas inventory each year since 2021. The action cost invested in managing the climate risk in 2023 was less than 0.001% of the total operating revenue, while the management cost increased by 30% from 2022.
4.Metrics and Targets
In order to implement sustainable management and achieve the Group’s declared goal of Net Zero emissions, WPG Holdings conducts annual greenhouse gas inventories and further verifies the credibility and consistency of emission data through third-party verification and continues to expand the Group’s scope of greenhouse gas inventories and verification, as well as publicly disclose relevant content of climate-related financial disclosures. Until 2023, the information about locations covered has already included Scope 1, Scope 2, and designated Scope 3 Greenhouse Gas emission data for offices and self-owned warehouses in the territories of Taiwan and China, and all overseas territories.
Net Zero Vision of WPG Holdings
Achieving net zero emissions by 2050 is the goal of WPG Holdings. In addition to the Group’s overall carbon emission inventory, our net zero vision is based on the science based (SBTi) reduction roadmap, and it promotes the company to move toward net zero in three steps, including “improving the energy utilization rate (energy conservation), use of renewable energy and removal of new technology/ (carbon credit) crediting residual emission.” Gradually advancing the company towards Net Zero.
