GIGABYTE is committed to mitigating the impacts caused by business operations on climate change. Visionary management policies and effective response plans have been adopted for effectually promoting climate-rated management and adaptation measures. The GIGABYTE Green Sustainable Development Committee, chaired by the Company’s chairman, serves as the highest level responsible for supervising organizational emission management, reduction target setting, and practical measures and action plans. The Sustainable Development Office under the Operation Management Center is in charge of execution and promotion of the measures, and reporting the progress and outcomes of climate-related management to the Center, the Committee, and the Board regularly.
Greenhouse Gas Emission Management
GIGABYTE is not only concerned with climate risks and tendencies but also expecting to become a corporate practitioner of emission reduction through implementing climate mitigation actions and expanding the influence to a larger scope. In 2020, we decided to adjust the current long-term emission reduction target to a more ambitious commitment: “GIGABYTE advances the target year of 50% reduction from 2030 to 2050”!
GIGABYTE periodically inventories own greenhouse gas emissions in accordance with the ISO14064 standard, gradually expands the scope of inventory, and strives to meet the short-term target of a 3% annual reduction in carbon emissions, water and waste compared to the previous year. We will continue to actively monitor our carbon reduction progress and performance even as we set our sights on even more significant long-term carbon reduction goals.
The globe is now encouraging businesses to respond to the Science-based Targets Initiative (SBTi) and set up their emission reduction target through scientific methods that can ensure keep the global warming under 2°C. GIGABYTE has not publicly committed to setting a science-based target. However, We have introduced the tools and target criteria recommended by SBTi to analyze the gap of the pathway between the existing carbon reduction target and the target that meets science-based principles.
Greenhouse Gas Emissions Status
Emission reduction is the top priority in climate change mitigation. GIGABYTE established an organizational greenhouse gas emission inventory mechanism in 2021 and conducts annual inventories on the scope 1 and scope 2 emissions of the Headquarters and all factories. Starting from 2022, we extend the reporting boundary to encompass our offices at Taipei Silicon Valley Park in Xindian. 6 categories of scope 3 emissions are also added. All subsequently passed a third-party verification against the ISO14064-1: 2018 standard.
The greenhouse gas emissions of GIGABYTE in the recent 4 years are as follow:
| Year | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|
| Scope 1 Emissions | 657.63 | 648.09 | 1,063.52 | 627.81 |
| Scope 2 Emissions | 27,800.91 | 28,123.84 | 28,874.43 | 27,283.64 |
| Total (Scope 1+2) | 28,458.54 | 28,771.93 | 29,937.95 | 27,911.44 |
| Comparison with the previous Year | +2.87% | +1.10% | +4.05% | -6.77% |
| Comparison with the Base Year | -41.87% | -41.23% | -38.85% | -42.99% |
For the details of emission reduction, please refer to CSR Performance – Environmental Aspect.
Climate-related Risk Assessment and Management Strategy
To get a full picture of the impacts on our business resulted from climate change or the opportunities that it may create, GIGABYTE adopts the Task Force on Climate-related Financial Disclosures (TCFD) framework to identify short-, medium- and long-term climate-related risks and opportunities and establish various responding strategies and management measures for each type of risk and chance. While planning on the management strategies for climate-related risks and opportunities, we take the financial impacts, the changes to operational strategies or business models, and the effects on the whole value chain into account. Climate scenario analyses are also conducted and are reviewed and re-evaluated every year.
For the information responding to 11 recommended discloses under 4 core elements of the TCFD framework, i.e. governance, strategy, risk management, and metrics and targets, please refer to page 80 of the 2021 GIGABYTE Sustainability Report.
Process of Climate-related Risk Identification
Climate Risk Matrix
| Climate-related Risk | Risk Type |
|---|---|
| 1. Increasing rigor in GHG emission disclosure requirements |
Transition Risk – Policy and Legal |
| 2. Fluctuation of investment cost and electricity tariffs due to energy transition policy and structural adjustments | Transition Risk – Policy and Legal |
| 3. Impact on trade costs from progressive activation of carbon pricing mechanisms in the international market | Transition Risk – Policy and Legal |
| 4. International trends lead to carbon footprint as a factor of product competitiveness | Transition Risk – Technology |
| 5. Increased sustainability awareness among consumers and changing preferences | Transition Risk – Reputation |
| 6. Downstream customers raise their carbon management requirements for the supply chain | Transition Risk – Market |
| 7. Increasing severity of extreme climate events | Physical Risk – Acute |
| 8. Variation in precipitation and climate patterns | Physical Risk – Chronic |
| 9. A drastic increase in the cost of cooling as temperatures continue to rise | Physical Risk – Chronic |
GIGABYTE Climate-related Risks and Opportunities
Transition Risks
[Risk Description]
- EPA amendments to Greenhouse Gas Reduction and Management Act will activate carbon fee mechanism.
- Define renewable energy transition targets and issue “Renewable Energy Development Act” to set requirements on ratio of renewable electricity; increases to ratio of renewable energy will also lead to higher electricity prices.
- EU will implement the Carbon Border Adjustment Mechanism (CBAM) in 2023 and collect fees on imported products based on their scale of direct carbon emissions.
- China is committed to peaking carbon emissions by 2030 and reaching carbon neutrality eventually. Enhanced management measures such as an emission trading scheme and dual energy and intensity controls generates compliance risk for the operating sites in China.
[Potential Financial]
- Increased operating costs, such as compliance costs.
- Cost of production will increase because of investment in energy transition and fluctuations in energy prices.
- Carbon pricing mechanism will increase product costs, or increase operating costs from compliance on carbon reduction.
[Management Measure]
Strategy：
- Continue to strengthen environmental management system.
- Invest in climate-related research and management manpower.
- All business location implement energy conservation solutions, and replace old equipment to improve process efficiency.
- Invest in climate-related research and management manpower.
Action：
- The GIGABYTE Green Sustainable Development Committee develops and supervises the implementation of sustainability strategy.
- The responsible unit continuously supervises international laws, regulations and trends.
- Participate in domestic climate response meetings and adjust the direction of climate policy in time to meet compliance requirements.
- Implement ISO 14064 and perform third-party certification.
- The “Sustainability Fund” was set up in 2019 to transform the savings from energy and resource conservation into the reward for units with reduction performance in order to promote continued internal innovation and improvements to resource utilization.
- Set up life cycle assessment system to analyze 12 environmental impact categories, such as carbon footprint, of all products series.
Product carbon footprint has become a key part of market consensus due to global consensus on the 2°C or even 1.5°C scenarios. Nearly 95% of GIGABYTE products are export so a low-carbon transition will be essential to maintaining brand competitiveness.
[Potential Financial]
Reduction in demand for products and services that leads to lower revenues, or increase in production operating costs due to nations’ environmental regulatory requirements.
[Management Measure]
Strategy：
- Voluntary analysis and disclosure of carbon footprint information for all products.
- Promote energy conservation policy at all operating locations and investment in the R&D of energy-efficient and low-carbon products.
- Strengthen supplier management to lower the environmental impact of the value chain as a whole.
Action：
- Appropriate research and development budget from revenue every year to develop high efficiency, low-carbon footprint products.
- Voluntary introduction of Product Life Cycle Assessment and Material Flow Cost Accounting (MFCA) as well as inventory and disclose the Scope 3 emissions of our organization.
- Launch the “Sustainability Fund” to reward the development of low-carbon products and cultivate the capability to develop products with low environmental impact.
[Risk Description]
The rise of consumer awareness on climate change topics may change consumer preferences. As a brand vendor, GIGABYTE must make constant adjustments to our product to satisfy consumer expectations and maintain our brand value.
[Potential Financial]
Decline in demand for products and services due to changes in consumer preferences.
[Management Measure]
Strategy：
- Continue to invest in the research and development of low-carbon products and services.
- Analyze, assess and disclose carbon footprint and other environment-related information of products.
Action：
- Appropriate research and development budget from revenue every year to develop high efficiency, low-carbon footprint products.
- Continue to publish product environmental reports to voluntarily disclose the 12 environmental impact categories of key products to fulfill our duty as a producer.
Growing corporate awareness on climate change has led to increasingly strict requirements on carbon management in the supply chain by downstream customers. Those that fail to meet those standards may miss out on orders and opportunities for cooperation.
[Potential Financial]
- Changes in customer behavior lead to a decline in demand for products and services.
[Management Measure]
Strategy：
- Invest in the R&D to create products that meet the market needs.
- Set energy-saving targets, plan green projects, and track results.
Action：
- Continue implementing the “333 Reduction Plan”, which strives for reducing carbon, water and waste by 3% every year.
- Implement ISO 14064 and perform third-party certification.
- Introduction of tools such as product life cycle analysis and material flow cost accounting for examination of potential energy-saving opportunities.
- Launch the “Sustainability Fund” that uses the energy savings from previous year as the incentives for emission reduction in production processes and the development of low-carbon products.
Opportunity Derived from Transition Risk
- Introduce internal carbon pricing mechanism to assess the true cost of products and target source of energy consumption to improve product competitiveness.
- Continue to optimize the energy efficiency of processes so that production output increases while operating costs are reduced.
- Crossover into the market for low-carbon products or services to increase brand visibility and boost brand value.
- Transition to green product services to satisfy customer requirements and consumer preferences.
- Develop and apply renewable energy to realize carbon reduction targets and fulfill corporate responsibility on environment.
Physical Risk
[Risk Description]
Extreme weather events are increasing in frequency and severity. Taiwan in particular is located in the typhoon-prone northwest Pacific so is at higher risk of flooding and typhoons.
[Potential Financial]
The health and safety of employees are threatened, and the cost of manpower management and maintenance increases, resulting in reduced profits.
[Management Measure]
Strategy：
- Develop typhoon- and flood-related management approaches and increase supplier diversity.
Action：
- Establish the “Risk and Emergency Management Approaches” according to ISO14001.
- Factories conduct water shortage drills in response to potential water restrictions during the dry season.
- Establish a water recycling system at the Dongguan and Ningbo Factories in China.
- Diversify the supply chain to ensure the supply of critical raw materials without concerns.
[Risk Description]
The Headquarters, manufacturing bases, and most of the important suppliers are located in the marine areas. With the risk of drought and flood increases, the stability of operation and material supply may be affected.
[Potential Financial]
The interruption of transportation and the unstable supply of raw materials would result in a reduction of production capacity and affect sales revenue.
[Management Measure]
Strategy：
- Develop typhoon- and flood-related management approaches and increase supplier diversity.
Action：
- Establish the “Risk and Emergency Management Approaches” according to ISO14001.
- Factories conduct water shortage drills in response to potential water restrictions during the dry season.
- Establish a water recycling system at the Dongguan and Ningbo Factories in China.
- Diversify the supply chain to ensure the supply of critical raw materials without concerns.
[Risk Description]
Global warming shows no signs of easing and the urban heat island effect is becoming increasingly obvious. This will lead to drastic increases in the cost of cooling for offices and factories.
[Potential Financial]
Increased energy expense rates and production costs.
[Management Measure]
Strategy：
- Monitor and improve air-conditioning efficiency, establish extreme climate response plans
- Maintain the eco-roofs to reduce indoor temperatures.
Action：
- Upgrade or remove old AC and cooling equipment to improve the energy efficiency.
- Establish the “Risk and Emergency Management Approaches” according to ISO14001.
- Install and maintain the G-HOME Sustainable Eco-Roof, effectively reduce the indoor temperature of the highest floor level by 2.5°C, and rooftop surface temperature by 25°C.
Opportunity Derived from Physical Risk
- Diversification and distribution of product sources in the supply chain can improve the stability of material supply and strengthen the risk resilience of the supply chain.
- Improve the energy efficiency of offices, processes and equipment to reduce the carbon footprint of products and services as well as save operation costs.
Climate Scenario Analysis
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