A Practitioner of Green Manufacturing

Climate Strategy and Energy Management

HIWIN places significant emphasis on the efficacy of corporate energy conservation and carbon reduction. Every year, the sustainability reports discloses HIWIN’s energy management policies and utilization performance. Since the introduction of the FSB’s TCFD in 2017, HIWIN has actively engaged in internal and external expert reviews and consulting systems to explore and plan accordingly. As a result, HIWIN has become a TCFD supporter and included its first disclosure in the 2021 report. In 2022, HIWIN further enhanced its inventory and review mechanism, providing regular updates to the Chairman of the ESG Committee. This allows for a comprehensive evaluation of the risks and opportunities faced by the enterprise, along with the corresponding responses and guidance measures.

Climate risk and opportunity identification and assessment

In line with the TCFD framework, HIWIN convenes regular workshops to identify climate risks and opportunities, bringing together department managers and external consultants. We focus on eight major risk categories, including existing and emerging regulations, technological, legal, market, and reputational risks, as well as immediate and longterm physical risks. These risks encompass our operations, upstream and downstream activities, and customer activities. During the workshop, various groups engage in in-depth discussions on the likelihood and impact of these risks and opportunities and map out a risk and opportunity matrix. We then prioritize the top five risks and opportunities based on their dimensions and scores. The ESG Committee then reports the results to the president (Chief Sustainability Officer). The risks and opportunities are analyzed according to their potential revenue impacts, feasibility, and effectiveness. Resulting decisions are as follows.

With climate risk assessments and the risk impact matrix, we’ve identified flooding and drought risks as having potential impacts to our operations. We’ve combined these findings with a physical risk analysis model to estimate potential losses.

Regarding the monetization analysis of flood risk, HIWIN utilizes rainfall observation and scenario simulation data to determine the duration of operational disruptions caused by flooding in each factory under various scenarios. Based on the revenue data of each factory, the losses attributed to flood risk are estimated. Analysis conducted in 2024 revealed, under various scenarios, the financial impacts of floods remain far below 1% of our annual revenue. In 2024, HIWIN experienced no instances of floods, and this does not constitute significant financial impacts.

In 2021, Taiwan faced a significant drought. To ensure the quality of our products, HIWIN took several measures, including purchasing water storage equipment, deploying water trucks for backup, and implementing other water stewardship initiatives. These actions resulted in additional management costs. To assess the potential impact of future droughts, HIWIN used drought indicators and management costs from 2020 to 2021. By analyzing these data, we estimated the trend of drought risk changes in future climate scenarios and projected the potential management costs that may arise. Using the Taichung factory in 2023 as an example, our analysis revealed that the additional management costs caused by droughts, under all scenarios, amount to less than 1% of our annual revenue. Therefore, these costs do not pose a significant financial impact.

In line with the TCFD identification and assessment process, we focus on both transition and physical risks and opportunities. Transition risks include international industry regulations and voluntary standards as well as changes in customer and market demand. For example, rising raw material costs could drive up operational expenses while shifts in demand might lead to revenue declines or profitability challenges. Both examples could have significant impacts on HIWIN’s operations. Physical risks include the rising occurrence of extreme weather events and changes in rainfall and weather patterns, which could disrupt production continuity and consistency, leading to disruptions in our operations and shipping (related action plans will be implemented within the next five years). Additionally, international regulations, such as the EU’s tax on plastic packaging and mandatory disclosure of product carbon footprints, pose minor impacts on our operations and management costs. Opportunities focus on more efficient production processes as well as resource substitution and diversification. HIWIN will engage in preliminary investments in the short-term and generate more opportunities in the long-term to capitalize on climate opportunities and increase our revenue. For example, in 2022, we increased the energy efficiency of production processes by 7% to save electricity expenses. In 2024, we started generating solar energy for self-use to save electricity expenses and carbon fees, while further advancing energy efficiency of production processes to contribute to revenue.

HIWIN passed the Science-Based Targets initiative (SBTi) validation in 2024 and committed to achieving SBTi Net-Zero by 2050, advancing its sustainable goal toward Net-Zero emissions. Accordingly, the data disclosed in this section have been adjusted to include all operating sites of the parent company as well as all subsidiaries. For the SBTi short-term targets, the total Scope 1 and 2 emissions for 2024 are 130,193.580 tCO₂e, representing a 26.2% reduction compared to the base year 2021.

Regarding the Scope 3 short-term reduction targets, the main categories are C1 (Purchased Goods and Services), C3 (Fuel- and Energy-Related Activities), C4 (Upstream Transportation and Distribution), and C11 (Use of Sold Products), covering approximately 75.29% of the total Scope 3 baseline emissions. Based on the coverage of these four categories, the estimated Scope 3 emissions for 2024 amount to 178,562.915 tCO₂e, showing a downward trend compared to the base year. However, this still exceeds the original 2024 emissions target of 4,880.73 tCO₂e (2.7%), mainly due to increased sales volume of electrical products driven by the group’s electromechanical integration sales strategy.

Based on historical Greenhouse Gas inventory results, the main emissions for HIWIN’s Scope 1 and 2 originate from Scope 2. Therefore, the Greenhouse Gas reduction strategy focuses primarily on energy management. In 2024, energy-saving improvement initiatives will be promoted, including standby power reduction and process equipment energy efficiency enhancements, compressed air reduction, and cooling tower heat dissipation improvements at the manufacturing stage. Moving forward, the company will continue to implement the ISO 50001 Energy Management System to further reduce Greenhouse Gas emissions.

In addition to its own operational greenhouse gas emissions, HIWIN also references ISO 14064:2018 and the GHG Protocol standards to inventory indirect greenhouse gas emissions across various categories. The primary Scope 3 emission categories are C1 (Purchased Goods and Services) and C11 (Use of Sold Products). The company will continue to focus on developing low-carbon products and working with the supply chain to achieve emissions reductions.

HIWIN has long been attentive to global carbon pricing trends. To conduct cost-benefit analyses, drive energy use efficiency, drive low-carbon investments, incentivize consideration of climate-related issues in decision-making, identify and seize low-carbon opportunities, influence strategic or financial planning, setting or achieving climaterelated policies, proactively address risks from future carbon pricing policies increasing costs, and strengthen internal carbon reduction motivation, HIWIN introduced carbon fee mechanisms in 2025. This system internalizes the economic costs of carbon emissions generated from operational activities and assists the company in embedding energy saving and carbon reduction in its decision-making processes.

The internal carbon price uses the shadow price approach, based on carbon fees, emissions trading systems (ETS), and regulatory fees to calculate the cost required to reduce 1t of carbon emissions. Following a resolution by the ESG Committee, the rate is set at US$ 50 / tCO₂e , covering Scope 1 and Scope 2 Greenhouse Gas emissions. At the beginning of each year, the rate will be reviewed and adjusted if necessary, with reference to carbon fee trends, internal carbon pricing set by domestic and international companies, and the company’s internal carbon reduction targets.

The initial implementation will be piloted at HIWIN’s Taiwan factories. When evaluating investments in energy-saving equipment, the concept of carbon payback period will be introduced, considering not only the financial payback period but also carbon reduction benefits as one of the assessment indicators. Carbon fees will be charged to each manufacturing unit and pooled into a carbon fee fund. The carbon fee charged through the internal carbon pricing mechanism is reflected in the monthly management report and linked to the performance evaluation of each factory and manager to incentivize investments in low-carbon equipment and process carbon reduction.

 Energy usage

In 2024, HIWIN added the use of renewable electricity, with total energy consumption reaching 961,430 GJ. Purchased electricity accounted for 89%, with 4,928 GJ from purchased solar power and 13,685 GJ from self-generated solar power. Compared to the 2021 base year, energy intensity increased by 6%, while energy consumption decreased by 17%. Efforts will continue to be reviewed. In 2024, HIWIN promoted the Energy Conservation and Carbon Reduction Task Force, forming a team of experts to develop relevant strategies aimed at accelerating energy efficiency improvements. To raise employee awareness of energy, energy education and training courses were held, with 193 participants and a total of 1,363 training hours in 2024. These efforts helped employees gain in-depth understanding of energy-saving technologies and future trends, jointly promoting the company’s green transformation and sustainable development.

 Energy conservation actions

HIWIN has achieved scientific-based energy management goals through smart energy management strategies. The organization has established an energy baseline and Energy Performance Indicators (EnPIs), using visualization and systematic diagnosis to identify major energy consumption hotspots for management and energy-saving solutions. The three-stage objectives progress from building a foundation for smart energy management, to promoting smart energy management applications, and finally achieving energy management optimization.

In 2024, visualization monitoring systems for each factory were completed. By continuously collecting large energy consumption data for statistical analysis, a smart energy decisionmaking digital model was established as the basis for the rollout and optimization of the third-stage energy management optimization module.

HIWIN is dedicated to effectively managing energy consumption and enhancing energy efficiency by shifting from a passive to a proactive approach, from energy saving to energy generation, and from refining the energy management system to smart monitoring to achieve optimal power generation efficiency. In 2024, we launched 27 energy-saving projects and plan to implement 29 projects in 2025. These initiatives include equipment efficiency upgrades and standby energy management, with an estimated carbon reduction of 2,115 tCO₂e and an estimated electricity savings of 4,461MWh. Leveraging our own capabilities and expertise, HIWIN continues to explore boundless possibilities for energy conservation across various fields.

 Green energy development

To support the government’s prioritization of carbon reduction and promote sustainable green energy development, HIWIN has been installing solar photovoltaics power generation systems since 2016. Prior to 2023, all generated power was sold to Taipower. By 2024, we had installed approximately 2,935 kW of solar power capacity, with actual self-generated and self-used solar power reaching about 3,801 MWh in 2024. In 2025, we plan to develop an additional capacity target of 2,200 kW, bringing the total installed capacity to approximately 5,135 kW, with an estimated annual self-generated green electricity of about 6.4 million kWh. We will continue to plan and install solar photovoltaics power generation systems on our own buildings in the future.

In 2023, the Chiayi County Government and WEPOWER signed an MOU to jointly establish a Green Energy Bank. HIWIN was among the first to sign a 1.2 MW contract to purchase locally produced renewable energy, with approximately 1.5 million kWh of solar power available for wheeling annually starting in 2024, for a duration of 20 years. Actual wheeling of solar power began in April 2024, reaching about 1.12 million kWh.

Under Taipower’s small-scale green energy sales pilot program for renewable energy certificates, HIWIN secured 250,000 kWh of green electricity annually for five years starting in 2024, with actual wheeling of 250,000 kWh in 2024.

In 2024, externally purchased green electricity wheeled amounted to 1,368 MWh, with 1,367 renewable energy certificates obtained. The total of self-generated and externally purchased green electricity reached approximately 5,169 MWh in 2024.

Starting in 2024, HIWIN is actively assessing the feasibility of various green electricity procurement and wheeling options, continuously expanding and optimizing renewable energy allocations in line with the 2050 Net-Zero pathway requirements.

 International environmental protection day activities

To raise employees’environmental awareness, encourage collective participation in environmental actions supporting the UN Sustainable Development Goals (SDGs), and maintain ongoing focus on various green sustainability issues, HIWIN organizes annual activities in observance of international environmental days. In 2024, the following events were held to engage employees in joint support and participation:

 World water day

Rapid technological development worldwide has led to drastic climate changes, causing water shortages. Through World Water Day, we encourage employees to cultivate water-saving habits in daily life and take action to support the UN Sustainable Development Goals (SDGs).

 Earth day

Earth Day, celebrated every April 22 as a global day for environmental advocates and awareness, is promoted at HIWIN by inviting employees to respond and show their support. Employees select from 21 green action tasks they wish to participate in, and upon completion, they record reflections and photos of their actions. Participants receive limitededition reusable bags, eco-friendly cutlery sets, and green points. The event attracted 166 enthusiastic employees, demonstrating strong commitment to environmental protection.

 Earth hour

Earth Hour is a global voluntary energy-saving and carbon reduction event. In 2024, HIWIN’s General Manager personally led the ESG team in participating in the event’s photo campaign. HIWIN Group locations—including 9 factories in Taiwan, HIWIN Mikrosystem, Matrix Precision, subsidiaries in Japan, Korea, and China, as well as invited suppliers—all joined the initiative.

HIWIN Group hopes that “everyone can contribute to the planet through small lifestyle changes,” actively inviting employees and their families to participate in Earth Hour. On the event day, participants creatively photographed lights-off scenarios, uploaded them to the company’s ESG website, and wrote reflections to receive exquisite gifts. Through this event, HIWIN Group reduced 10.13 kg of CO₂e emissions. Having held the event for three consecutive years, HIWIN plans to continue in 2025 and invite suppliers to join as well.