Climate Change and Energy

Goals and Strategies

As part of guiding people to be Earth citizens and being a corporation that leads people to live happy lives, Advantech strives to improve the environment and maintain labor safety. In 1996, we introduced the ISO 14001 Environmental Management System standard, followed by the OHSAS 18001 (changed to ISO 45001 in 2020) Occupational Safety and Health Management System standard in 2005. Through complying with governmental regulations on environmental protection and labor safety and health, we focus on reducing the impact of our operations on overall environmental safety and health by engaging in activities such as greenhouse gas management and product design, use, and disposal. Since 2015, Advantech has been participating in the CDP Through annually disclosing emissions information through the CDP, we review the risks that climate regulations, climate disasters, and other climate-related topics have on our operations. We then implement effective measures to reduce or eliminate risks in order to meet international clients’ demands on greenhouse gas management. In 2020, Advantech was categorized as a B-list company.

Management Policy

Meet all environmental regulations. Our goal is zero pollution and zero violations of relevant regulations.

Identify risks caused by climate change and respond to them.

Establish short-, mid-, and long-term goals for saving energy and reducing carbon emissions, and develop practical processes and promote them.

Item
Results in 2020
Goals for 2021
Goals for 2025
Energy management
Results in 2020
Compared to 2019, our overall GHG emission density per unit revenue in 2020 was reduced by 2.1%
Compared to 2019, the energy consumption output value at Kunshan (manufacturing plant) was reduced by 3.2%
Compared to 2019, the energy consumption per capita at Kunshan (R&D park) was reduced by 14.2%
Goals for 2021
Introduce a BEMS to Linkou and Kunshan
Obtain the green factory certification for the Kunshan plant
Goals for 2025
Compared to 2019, Advantech’s overall GHG emission density per unit revenue is reduced by 30%
Reach 20% on the proportion of green power use in China and Taiwan
Develop renewable energy
Results in 2020
Collected regulations and conducted internal studies. We have evaluated that in the future, we will purchase renewable energy (Currently, we are preliminarily evaluating solar power.)
Goals for 2021
Linkou solar panel power generation accounts for 4.5% of the total electricity use
Goals for 2025
Linkou solar panel power generation accounts for 6.5% of the total electricity use

Annual Performance Highlights

Annual Performance Highlights

Ranked in the B List in the 2020 Climate Disclosure Project (CDP) climate change questionnaire evaluation

Zero violations: we use our environmental management system to regularly inspect our performance. In 2020, we did not violate any environmental protection policy requiring amendments to be made

Compared to 2019, Advantech’s overall GHG emission density per unit revenue reduced by 2.1%

Climate Risk Identification and Response

To protect corporate assets and the rights of critical stakeholders and to meet corporate governance principles, Advantech implements risk management procedures to reduce and eliminate potential risks while offering suitable compensation measures and timely recovery mechanisms. For natural disaster risk management, we review risks in the realms of climate regulations, climate disasters, and other climate-related topics on operation management, and we take effective measures to reduce or eliminate any risks.

Climate change: Risks and opportunities

Risk type
Risk item
Impact assessment
Climate opportunities
Actions in response
Transition Risks
Policy and regulation risks
Greenhouse gas inventory and disclosure
Improve energy efficiency to reduce operation costs
Promote data inventory to understand the current situation on greenhouse gas emissions and energy use. Carbon reduction goals are set based on the inventory results (2020 KPI: to reduce 2.5% CO2e/revenue).
Regulations on reducing and managing greenhouse gas emissions
Improve energy efficiency to reduce operation costs
Upgrade old equipment to improve energy use efficiency. In 2020, all chillers were replaced at Advantech Headquarters. In 2021, we plan to replace plant equipment.
GHG total quantity control and emission trading system
Participate in the carbon emission trading market
Plan to purchase renewable energy and obtain licenses and carbon credit. In 2020, we conducted assessments for purchasing renewable energy licenses.
Regulation fees increase operation costs
Establish policies that go above and beyond legal requirements to increase corporate competitiveness
Consolidate legal compliance and corporate sustainability. Respond to the government’s usage policies on renewable energy.
Technology risks
Stakeholders pay more attention to low-carbon products and services
Develop or expand energy-saving products and services to gain stakeholder trust
To ensure service quality, we provide green and low-carbon products and services.
Market risks
Fluctuations in global fuel prices affecting production and operation costs
Develop renewable energy plans to promote the diversification of corporate energy
Promote renewable energy development plans and use clean energy. Solar power generators have been established at Linkou and Kunshan. In 2021, we plan to continue installing solar power at new factories.
Physical Risks
Immediate risk; long-term risk
Climate change can exacerbate natural disasters, which can damage our plants, resulting in unstable product quality and a higher risk of goods being returned
Strengthen organizational operations to enhance production line resistance against natural disasters.
Establish crisis management procedures and disaster-prevention and response capacity. We have established crisis management procedures for our overseas plants.
Climate change can exacerbate natural disasters, resulting in the unstable supply of energy and resources
Identify high-risk supply chain components and actively enhance the stability of suppliers
Consolidate supplier assessment mechanisms. Strengthen supplier quality and environmental management ability. Increase the number of approved backup suppliers. Each year, we regularly audit our suppliers.
Climate change can exacerbate natural disasters, resulting in higher raw material costs and reduced or interrupted production capacity
Identify high-risk supply chain components and actively enhance the stability of suppliers
Consolidate supplier assessment mechanisms. Strengthen supplier quality and environmental management ability. Increase the number of approved backup suppliers. Each year, we regularly audit our suppliers.

Greenhous Gas Inventory and Management

Based on Taiwan’s Greenhouse Gas Reduction and Management Act and ISO 14064-1, which states the quantification, supervision, report, and verification process for greenhouse gas inventories, Advantech established the Greenhouse Gas Inventory Promotion Committee to ensure low carbon emission operations through the promotion of various tasks on greenhouse gas inventory and reduction. Since 2015, Advantech has been participating in the CDP Each year, Advantech discloses its carbon reduction plans and results. The data disclosure scope covers Advantech Taiwan and Advantech Kunshan. Since 2017, these two sites have accounted for at least 96% of Advantech’s total production capacity.

Greenhouse gas inventory

Advantech’s plants in Taiwan adhere to ISO 14064-1 and the GSG Protocol. In addition to conducting a self-inventory, starting 2019, SGS Taiwan has been conducting third-party onsite inspections. Organizational boundaries refer to requirements and suggestions in the ISO 14064-1:2006 standard, with operational control employed to establish organizational boundaries. Domestic and foreign subsidiaries are not included. Our greenhouse gas inventory management procedures and inventory reports are used to reidentify emission sources. In 2020, Advantech plants in Taiwan, Scope 1 ‘s total emissions were 636.13 tons CO2e; major emission sources under Scope 1 generated 1,520 tons of CO2e in Advantech Kunshan; Neither Advantech Taiwan nor Advantech Kunshan has PFC emissions.
Scope 2 for Advantech Taiwan only involved the use of purchased electricity. Carbon emissions are calculated using the electric power emission coefficient, 0.509 kg of CO2e, as announced by Taiwan’s Bureau of Energy of the Ministry of Economic Affairs in 2019, totaling 9,819.0357 tons of CO2e. Scope 2 for Advantech Kunshan, including the use of purchased electricity and purchased steam, totaled 18,555.362 tons of CO2e.
Below table shows the emission levels for Scopes 1 and 2, which was 30,596.0889 tons of CO2e in 2020.

Advantech plants greenhouse gas Scopes 1 and 2 emission

Region
Scope 1
Direct greenhouse gas emissions
Scope 2
Indirect greenhouse gas emissions from energy
Total CO2e(tons)
Taiwan
Ruiguang Headquarters
113.5997
1,252.4921
1,366.092
Sunny Building
116.6942
1,511.5186
1,628.213
Donghu Plant
0.1345
846.6502
846.785
Linkou Park
405.7026
6,208.3748
6,614.077
China
Kunshan Plant
1,521.2086
18,592.5648
20,113.7734
Total emissions
2,157.3396
28,411.6005
30,568.9404
Region
Scope 1
Direct greenhouse gas emissions
Taiwan
Ruiguang Headquarters
113.5997
Sunny Building
116.6942
Donghu Plant
0.1345
Linkou Park
405.7026
China
Kunshan Plant
1,521.2086
Total emissions
2,157.3396
Region
Scope 2
Indirect greenhouse gas emissions from energy
Taiwan
Ruiguang Headquarters
1,252.4921
Sunny Building
1,511.5186
Donghu Plant
846.6502
Linkou Park
6,208.3748
China
Kunshan Plant
18,592.5648
Total emissions
2,157.3396
Region
Total CO2e(tons)
Taiwan
Ruiguang Headquarters
1,366.092
Sunny Building
1,628.213
Donghu Plant
846.785
Linkou Park
6,614.077
China
Kunshan Plant
20,113.7734
Total emissions
30,568.9404
Note: Greenhouse gas emissions from Advantech Taiwan were calculated using the latest version of the Greenhouse Gas Parameter Management Table released by Taiwan’s Environmental Protection Administration (Version 6.0.4 was released in June 2019), and using also the global warming potential parameter of each greenhouse gas announced by the IPCC in 2013.

Scope 1 Direct Greenhouse Gas Emission Amount of Advantech Plants (2017–2020) Metric ton CO2e Year

Scope 2 Energy Indirect Greenhouse Gas Emission Amount of Advantech Plants (2017–2020) Metric ton CO2e Year

Energy Consumption Amount of Nonrenewable Fuels at Advantech Plants (2017–2020) Year

Note: Nonrenewable fuels includes gas, diesel and natural gas.

Energy Consumption Amount of Steam (Nonrenewable) at Advantech Plants over the Years Year

Advantech Taiwan’s greenhouse gas emissions were primarily CO2 generated during the power generation of purchased electricity. This source of emissions accounted for at least 93% of Advantech Taiwan’s total annual emissions for 2020. In 2020, the average greenhouse gas emission (Scopes 1 and 2) turnover per unit was 0.058 tons of CO2e/US$1000, which was down 0.059 tons of CO2e/US$1000 compared to 2019. The main reason was that Advantech integrated the manufacturing systems in the Linkou and Donghu plants. By improving manufacturing efficiency and by utilizing the Linkou energy-saving system, we were able to reduce our overall electricity use. In 2019, Advantech Kunshan initiated various energy-saving special projects, including mechanisms for comparing the energy-saving efficiency of each unit, assessing and verifying the energy-saving performance of electrical equipment, and reducing the cost of general electricity use. In future, we will continue to set goals for reducing electricity consumption per unit of turnover per year. We will embed the concept of energy saving in the hearts of our employees, making it a critical part of our company culture.

To identify key factors to slow down climate change, Advantech Taiwan seeks to identify not only greenhouse gas emissions from its own operations, but also other emission sources. Starting from 2019, we have adopted the GHG Protocol Evaluator Tool to conduct emissions identification for Scope 3. We have also established relevant inventory methods to identify emission hot points, set goals for reducing emissions, and implement reduction measures incrementally. Below table lists the identification and emissions of Advantech Taiwan for Scope 3 in 2020. Because the emission sources of Kunshan plant are difficult to identify, we have not conducted an inventory for that plant. However, we will include it in the future.

Electricity Consumption Amount (Nonrenewable) at Advantech Plants (2017–2020)

Advantech Taiwan greenhouse gas Scope 3 identification and emissions

Category
Verification category description
CO2e emissions (tons)
Category
Activities related to fuel or energy that are not under Scopes 1 or 2)
Verification category description
Upstream fuel and energy of Taiwan Power Company
CO2e emissions (tons)
2,102.4332
Category
Waste generated during operations
Verification category description
Waste declared according to the Department of Environmental Protection via the Industrial Waste Declaration and Management Information System(does not include general waste)
CO2e emissions (tons)
0.8158
Category
Business travel
Verification category description
Employee travel by air
CO2e emissions (tons)
67.4089
Category
Employee commute
Verification category description
Linkou Park shuttle
CO2e emissions (tons)
446.0176
Total
2,616.6755

Future directions

In 2020, the COVID-19 pandemic affected the world, and corporations have had to adjust their operation models in response. Therefore, determining how to bolster corporate operations under the impact of the pandemic is a critical topic. The transformation to low-carbon emissions is a key factor. As of July 2020, countries that have promised to reduce carbon emissions by 2050 have a combined GNP exceeding 53% of global GDP. We hope that through the science-based target (SBT) method, we can calculate and achieve our carbon emission reduction goals. Also, according to the Task Force on Climate-Related Financial Disclosure (TCFD), we are able to identify climate risks for inclusion in our corporate operation management goals, thereby reducing any potential loss from climate disasters.

Energy Management Actions

Advantech’s overall energy management strategies consists of the following: daily energy-saving, developing a building energy management system (BEMS), and clean energy strategy.

Daily energy-saving

Holding video conferences over on-site meetings when possible

Prioritizing office equipment and electronic product procurement with energy-saving labels

Setting the indoor air conditioning temperature

Reminding employees to switch off any lights when they leave a room

Develop a BEMS

Advantech is striving to further develop BEMSs in the workplace. From management to operations and maintenance, our energy-saving management strategy is two-fold. It depends first on obtaining energy-consumption information and then uploading the data to the cloud for analysis with AI. In addition to this allowing us to visualize the energy consumption data for real-time monitoring and alert notifications, it also facilitates adjusting scheduling, performing equipment cleaning and maintenance, and replacing high-energy-consumption equipment.
We upgraded our BEMS in mid-2020 and transferred the platform to the Advantech WISE-Stack private cloud. It is expected to be officially launched in 2021 Q1 in our Linkou branch. The first couple of functions include energy-saving performance overview for the top decision-makers as well as real-time energy-use monitoring and abnormal energy-use analysis for managers. We plan to launch a cellphone version and will gradually expand this to Kunshan Park and other manufacturing systems.
Moreover, since 2020 Q4, we have been uploading monthly electricity and water use to our internal eManager system for our Linkou, Neihu, Kunshan, Shanghai, Xi’an, and Beijing branches. This allows different business units in each factory to monitor changes in their monthly electricity and water use. Comparing this information against historical data allows us to determine whether we are achieving energy conservation goals. By making energy consumption data internally transparent, we can generate a top-down management effect on energy-saving within the company.

Clean energy strategy

Solar power: Solar panels have been installed at the Linkou Park site since June 2019. Each month in 2020, they generate approximately 46,682 kWh of electricity, which is connected in parallel to the power grid. In addition, the new building in Linkou Phase 3 is planned to be equipped with solar panels, and they are estimated to generate 8,000 kWh of electricity per month.

Electricity purchase: We are planning to purchase green energy, with plans to incrementally purchase more green electricity starting from 2022.

Looking to the future, we plan to centralize production by integrating operations at the Linkou Phase 2 smart factory. Through energy management and production line optimization, our goal is to reduce energy waste and electricity consumption in order to consolidate energy efficiency. In pursuit of protecting human life and ensuring a green environment long into the future, we are dedicated to reducing the impact of our operations on the environment, from product design and use to waste. In addition to complying with relevant regulations, Advantech achieves environmental protection and sustainable corporate development through the participation and commitment of all employees.