Climate Change Management & Responses

 

 Climate Strategy

Realtek adopted the “Task Force on Climate-related Financial Disclosures (TCFD)” framework, evaluating opportunities and risks in times of climate change with four core elements, namely governance, strategies, risk management as well as goals and objectives, since 2020. In 2022, the Company further held a TCFD workshop to identify climate-related risks and opportunities. During the meeting, senior executives and the Sustainability Committee members evaluated and discussed the possibilities and degree of impact of climate issues, to identify the major risks and potential opportunities of climate change for Realtek in recent years, and further formulated the corresponding goals and strategies.

‧ Governance

Realtek continues to track international trends, customers and government concerns, and climate change-related information such as the impact on sustainable supply chain. It holds inter-departmental meetings to discuss climate change issues that may impact the Company, and regularly reviews, evaluates and improves its climate sustainability governance policies. Realtek follows the global warming scenarios issued by the UN’s Intergovernmental Panel on Climate Change (IPCC) to identify the factors contributing to extreme weather event, quantify financial impact information, and formulates a strategy for adaptation and mitigation. The climate change vision, strategies, and sustainable development goals are  approved by the Board of Directors. The president provides regular reports to the Board of Directors on the achievements of climate-related risk and opportunity management strategies, ensuring the implementation of a sustainable governance approach for climate change.

‧ Strategies

Realtek discusses and evaluates climate-related issues in the ESG Committee’s meetings. With reference to the “Shared Socio-Economic Pathways (SSP)” methodology proposed in the Sixth Assessment report (AR6) by the UN’s Intergovernmental Panel on Climate Change (IPCC), we conduct analysis under three climate scenarios, including SSP1-1.9 (Note 1), SSP2-4.5 (Note 2), and SSP5-8.5. Based on the results of the climate scenario analysis, we select SSP1-1.9 to evaluate the impact of climate change on the overall operation of Realtek under the ideal scenario where temperature rise is controlled at 1.5°C. We clarify the existing measures, response options, the form, feasibility and sources of obtaining quantified financial impact data, and compile the risks and opportunities of climate change that may affect Realtek; we follow the TCFD framework to identify climate-related transition risks, physical risks and opportunities, and analyze the issues related to Realtek’s operations. The potential impact, opportunities, financial impact and response strategies for climate change transition risks (regulatory requirements, changes in market preferences) and physical risks (supply disruptions, increased severity of extreme climate events, rising average temperatures, changes in rainfall patterns and climate patterns, rising sea levels) are shown in the table below. The main operational locations covered by the relevant response measures include Hsinchu Science Park, and offices in Taipei and Tainan.

Note 1: This represents a scenario where temperature rise is controlled to less than 1.5.
Note 2: This represents a scenario where temperature rise is controlled to less than 2℃.

In order to promote and achieve the goal of limiting the temperature rise within 1.5℃, we have developed and implemented various corresponding strategies such as energy-saving measures, installation of solar power generation facilities, implementation of sustainable supply chain management and energy management system based on the results of our scenario analysis on climate-related risks and opportunities. We assessed the potential financial impact of the key strategies, including the increase in air-conditioning costs, the costs of upstream supplier transition, the costs of setting up new solar power generation facilities, and the management and communication costs on sustainability issues. Although the short-, medium- and long-term financial impact caused by various climate issues may lead to an increase in expenses and management costs, the financial impact is less than 1% of net revenue after quantitative assessment.

‧ Climate Change Risk Management

Realtek’s climate-related risks and opportunities assessment in 2022 set a short-term timeframe for 2023, mid-term timeframe for 2024 to 2026 and long-term timeframe for 2027 to 2035. In accordance with the global temperature control target of limiting the temperature rise to 1.5℃ proposed by IPCC AR6, we evaluated the degree of relevance between the various development strategies of each business operation and climaterelated issues. It identified the potential impact of climate-related risks and opportunities on operations and the probability of occurrence, further developed the climate-related risks and opportunities matrix of Realtek, formulating the climate-related risks and opportunities response strategies.

‧ Objectives and Targets

In terms of corporate sustainable development, climate change is an important issue that cannot be ignored. Realtek continues to pay attention to and identify the potential impact of climate change, and formulates relevant management policies and plans. To mitigate the climate transition crisis caused by the greenhouse gas emissions. Realtek actively respond to the international net-zero emission initiative, Realtek announced to achieve the major goal of net-zero carbon emission by 2050. The plan is to gradually reduce the total carbon emissions and achieve net zero emissions by continuously developing low-carbon products, improving energy efficiency of equipment, constructing office buildings according to green building standards and obtaining certification, increasing the proportion of renewable energy usage, and implementing supply chain carbon reduction target management.