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Climate Strategy and Energy Management

Climate Change Management & Strategies

HIWIN places significant emphasis on the efficacy of corporate energy conservation and carbon reduction. For the past decade, the Company has consistently disclosed its energy management policies and utilization performance in its sustainability reports. 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 will include 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. The risks and opportunities are analyzed according to their potential revenue impacts, feasibility, and effectiveness. Resulting decisions are as follows.

Financial impacts are classified by percentage of revenue impacted. The diagram outlining the financial impacts of risks and opportunities is presented below:

Monetization Analysis of Physical Risks

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 2022 reveal that, under various scenarios, the financial impacts of floods remain far below 1% of our annual revenue. In 2023, 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.

Climate Risks and Opportunities Management

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 10% 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.

Striving for Net-Zero Emissions

In 2023, HIWIN signed the Science Based Targets initiative (SBTi) and set the following goals, committing to becoming a company that achieves SBTi Net Zero by 2050. We plan to submit for SBTi review within the next two years.

To realize our goal of net-zero emissions by 2050, we have developed four core strategies: enhancing energy efficiency, innovating low-carbon products, reducing waste through circular economy practices, and adopting renewable energy. Additionally, we are implementing Internal Carbon Pricing (ICP) to influence internal behavior, improve energy management efficiency, and accelerate low-carbon investments.

Based on global carbon market prices and Taiwan’s carbon trading regulations, we have set a shadow price of US$50 per metric ton. This shadow price will be first introduced in HIWIN locations in Taiwan, for which we will map out Scope 1&2 decarbonization plans and conduct regular reviews and updates based on carbon price trends.

GHG Inventory & Reduction

HIWIN is actively promoting greenhouse gas inventory policies across our production sites. In line with relevant guidelines and regulations issued by the Ministry of Environment, we define organizational boundaries based on operational control. We use the 2021 Global Warming Potential (GWP) values from the IPCC AR6 and the national emission coefficients announced by the Ministry of Environment and obtain third-party verification each year.

Due to structural changes in the reporting boundary or organizational boundary in 2023, we adjusted the baseline year for ISO 14064 greenhouse gas inventory for Scopes 1, 2, and 3 to 2023, selecting this year because it provides representative data for our organizational activities.

Direct and indirect emissions

In 2023, the total direct emissions (S1) and energyrelated indirect greenhouse gas emissions (S2) across all production sites amounted to 121,857.4902 tCO2e. The primary source of carbon emissions was indirect energy emissions from electricity use, accounting for 95% of total Scope 1 & Scope 2 emissions. All electricity came from local grids, with no renewable energy used. Therefore, the S2 greenhouse gas emissions were calculated using both Location-Based and Market-Based methods, which yielded identical values. In 2023, total emissions decreased by 18.8% from the previous year, mainly due to continued implementation of energy management strategies and management of standby energy consumption.

Other indirect emissions

HIWIN conducted a comprehensive greenhouse gas inventory for major production sites in accordance with ISO 14064-1:2018 standards and revised the baseline year to 2023. We included emissions from upstream procurement, transportation and distribution, product processing, fuel and energy-related activities, solid and non-solid waste disposal, and emissions from the end-of-life stage of products, covering eight categories in total. Future details will be disclosed in the future. The organization’s external energy consumption totaled 855,014GJ.

Reduction plan and achievements

Energy performance is a key management indicator at HIWIN. Carbon reduction measures include implementing energysaving improvements in processes and machinery, reducing use of compressed air, and enhancing heat dissipation in cooling towers. These efforts collectively reduced emissions by 20,425.47 tCO2e. Moving forward, we remain committed to promoting the ISO 50001 energy management system to further enhance energy conservation and reduce carbon emissions in our processes.

Energy Management

Energy usage

In 2023, HIWIN’s energy calculations encompassed the Taichung, Yunlin, and Chiayi factories, achieving full coverage. HIWIN’s primary energy consumption in 2023 totaled 855,014GJ, with 98% sourced externally. At present, we do not utilize any renewable energy sources. Energy usage decreased by 15% in 2023 from 2021, yet energy intensity increased by 7.5% from 2022. We will continue to review related efforts. In 2024, HIWIN will establish an Energy Conservation and Carbon Reduction Committee, forming a team of experts to develop strategies aimed at further enhancing energy efficiency.

Energy conservation actions

The ISO 50001:2018 energy management systems were implemented at HIWIN factories beginning in 2014. In 2023, we successfully completed verification at eight HIWIN locations. (Headquarters, Factory 2, Jingke Factory 2, Yunlin Factory 1, Yunlin Factory 2, Yunlin Factory 3, Dapumei Factory 1, Dapumei Factory 3).

HIWIN has successfully implemented scientific basic energy management through smart energy management strategies. We have established an energy baseline and Energy Performance Indicators (EnPIs), and utilized visualization and systematic diagnosis to identify major energy consumption hotspots for effective management and energy conservation solutions. Our three-stage action plan is as follows:

The first stage, which involved building the foundations for a smart energy management system, has already been completed. Each year, we conduct energy diagnostics on the system using precision measurement tools and energy conservation technologies. This allows us to analyze energy loss and assess potential for improvement, enabling us to develop more effective energy conservation plans.

In the second stage, we will continue to promote the application of smart energy management and the establishment of systematic smart decision-making. This stage is expected to be completed by 2024. We will progressively construct visualization monitoring systems for major energy-consuming equipment such as air compressors, air conditioners, and electricity. We will also collect big data on energy consumption for statistical analysis. Additionally, we will establish a smart energy decision-making digital model, which will serve as the foundation for the development and optimization of the third stage of the energy management optimization module. The third stage consists of completing the optimization of our energy management.

HIWIN is committed to energy management and anticipates numerous challenges in this field in the future. Consequently, we are dedicated to effectively managing energy consumption, enhancing energy efficiency, assuming a proactive stance in energy management, generating energy, and refining our energy management system and smart monitoring systems to maximize power generation advantages. In 2023, we launched 24 energy-saving projects and plan to implement 29 in 2024. These projects include efficiency upgrades for equipment and standby energy management, and have an estimated carbon reduction of 3,780 tCO22e and an estimated electricity savings of 7,637,000 kWh. Additionally, we have installed solar power generation, with a cumulative capacity of 2,934.715 kW from 2016 to 2023. By leveraging our distinctive competencies and expertise, we unlock boundless opportunities for energy conservation across various domains.

Green energy development

To support the government’s listing of carbon reduction as a key policy, HIWIN has been installing solar power systems, a source of renewable energy since 2016. By 2023, we had reached an installed capacity of 2,934.715 kW. Starting in 2024, we will gradually introduce green energy at all our production sites, and we estimate that we will be able to use 3,668,394 kWh of self-generated green energy each year.

Between 2024 and 2025, we plan to invest approximately US$4.23 million to install an additional 2,689.65 kW of solar capacity, bringing the total installed to 5,624.365 kW. This will enable us to generate approximately 7,030,456.25 kWh for green electricity for internal use annually. In the future, we will continue to plan and install solar power systems on our buildings.

In 2023, the Chiayi County Government and Wepower signed an MOU to establish a Green Energy Bank. HIWIN was among the first to sign a PPA for 1.2 MW of locally produced renewable energy, securing approximately 1,500,000 kWh of renewable energy each year, starting from 2024.

HIWIN also participated in Taiwan Power Company’s small-amount green electricity sales pilot program, securing 250,000 kWh of renewable energy per year for five years, starting from 2024.

Beginning in 2024, HIWIN will assess green power plants across Taiwan and invest in feasibility studies for the procurement and wheeling of renewable energies. This includes biodiversity assessments alongside evaluations of conservation corridors listed by the Taiwan Ecological Network to ensure the procurement of green energy does not negatively impactthe environment.

International environmental protection day activities

To enhance employees’ environmental awareness, promote environmental action in alignment with the UN Sustainable Development Goals (SDGs), and maintain focus on promoting diverse green sustainability initiatives, HIWIN regularly organizes a range of activities in observance of International Environment Day. In 2023, we facilitated three events, World Water Day, Earth Hour, and Earth Day, inviting employees to participate and show their support.

 World water day

The rapid advancement of global technology has resulted in swift changes in the global climate, leading to a crisis of water shortage. With the Day for Water initiative, we aim for employees to cultivate the practice of water conservation and contribute to the UN SDGs through tangible actions.

 Earth day

Earth Day is observed annually on April 22 as a day of environmental advocacy and awareness. In support of this global movement, HIWIN hosted an Ecological Education Film screening of “We Love Living Here” at the Sunrise Movie Theater in Taichung, inviting participants concerned with ecological conservation and the Earth’s environment to join us. Attendees who participated in the feedback survey received a limited edition reusable shopping bag.

 Earth hour

The Earth Hour initiative is a global voluntary program aimed at conserving energy and reducing carbon emissions. In 2023, HIWIN’s Chairman and President have personally led senior executives and employees in participating in a photo shoot activity. Various HIWIN Group operating sites, including 10 factories in Taiwan, HIWIN Mikrosystem Corp., Matrix Precision Co., Ltd., as well as subsidiaries in Japan, Korea, and China, responded to this event.

HIWIN Group’s goal is for everyone to contribute to the planet by making small changes in their lives. Therefore, employees and their families were actively invited to participate in the lights-off activity for one hour. On the day of the event, participants took creative photos of the lights-off situation, uploaded them to HIWIN’s ESG website, and wrote a 100-word description of the event for a chance to win a gift. In 2023, HIWIN reduced 41.34kg of CO 2e by supporting Earth Hour. This is our second year taking part in Earth Hour. We expect to continue the practice in 2024 and will invite suppliers to take part in Earth Hour as well.