Climate Change Response

Unusual climate trends, including rising global temperatures, storms and drought, are caused by climate change. They bring a range of challenges to corporate sustainability by affecting business operations and production activities, causing property losses and threatening the health and safety of employees. Enterprises around the globe as well as their supply chains need to confront these challenges and enhance their ability to respond quickly to climate change and resolve related issues.

Climate-Related Financial Disclosures (TCFD)

In 2021, according to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), the Sustainable Development & Marketing  Division of WNC formed a Working Group. The Working Group collects and discusses information about energy resources, administration and assets, markets and business, products and technology, and supply chain management to identify potential climate risks and opportunities related to each topic and their materiality. Furthermore, the Working Group formulates management strategies for major climate risks and opportunities through scenario analysis, quantifying the financial impact to the company of these risks and opportunities. The Working Group plans and prepares relevant response measures as early as possible to boost the Company’s ability to adapt to climate change. Following the introduction of TCFD in 2021, in January 2022, WNC added its signature to the TCFD official website to support the TCFD initiative. In addition to urging the industry, companies, and the public to focus on climate change issues, WNC is also committed to the continued improvement of the quality of information disclosure on its handling of climate related issues. WNC also regularly convenes working groups to review changes in climate risks and opportunities relating to climate risks, and it plans to publish an independent TCFD report starting 2023 to disclose detailed information on its TCFD management activities.

Governance

Board of Directors

The responsibilities of the Board of Directors include conducting business performance and work planning related to sustainable development as well as approving sustainable development-related proposals submitted by functional units and committees. From 2019, the Sustainable Development & Marketing Division has reported sustainable development-related business execution results and work plans of the previous year, including the effectiveness of stakeholder communication, carbon management, energy and resource management and other major issues, to the Board of Directors on a quarterly basis.

Sustainable Development Committee

WNC established a Sustainable Development Committee in 2022, consisting of top-tier managers from function units. The position of Chief Sustainability Officer, held by the most senior director of the Sustainable Development & Marketing Division, was also created. The Committee holds regular meetings to review compliance with regulations and customer requirements, progress of ESG projects and planning of new operations.

Sustainable Development Center

The issue of climate change has become a risk item that companies must pay attention to and actively attempt to control. In 2021, as mentioned above and according to TCFD recommendations, the Sustainable Development Center under the Sustainable Development & Marketing Division coordinated the establishment of a TCFD Working Group. It identifies climate-related risks and opportunities, evaluates potential financial impacts, and formulates corresponding management policies and action plans for major risks and opportunities.

Strategy

Identification of Risks and Opportunities Relating to Climate Change

The TCFD Working Group provides climate related risk and opportunity information based on the members’ duties, expertise and experiences and identifies the main risks and opportunities in the short term (1–2 years), medium term (3–5 years) and long term (6–10 years). It then draws up a climate risk and opportunity matrix that looks at likelihood of occurrence and degree of impact to determine issues that will have a major impact and formulate corresponding response measures.
Strategy
Risks
Opportunities
Source Impact Timeframe Potential Financial Impact Response Measures
Primary Risks GHG emissions regulations WNC’s operations Short-term Expanding the scope of greenhouse gas inventories leads to increased operating costs. Establish a global inventory of GHG emissions for all WNC sites and provide education and training on emission reduction measures. Starting from 2024, conduct third-party verification of greenhouse gas emissions annually.
Renewable energy regulations WNC’s operation, upstream supply chain vendors Long-term Installation and maintenance requirements of solar panels lead to direct cost increases. Purchased 6.8 million kWh of renewable energy certificates in 2022, gradually increased the number of solar panels installed in WNC sites, and set a target to increase the ratio of renewable energy usage to 100%.
Conventions or agreements on climate change mitigation and adaptation WNC’s operations Long-term Complying with international net-zero goals results in increased expenditure on carbon reduction implementation. Stay updated on government policies and implement carbon reduction projects.
Self-declared commitments and targets relating to GHG emissions WNC’s operations Short-term Continue to implement GHG emissions reduction initiatives. Progress on these initiatives is reviewed quarterly by the Sustainable Development Committee.
Customers have different considerations than before when choosing products or services WNC’s operations, downstream customers Short-term Decreased product orders and additional communication costs with clients lead to increased costs. Keep track of
  1. international trends and relevant regulations,
  2. customer environmental goals and practices,
  3. overall customer requirements for suppliers and WNC, and
  4. practices of industry benchmark companies. Develop or adjust strategies and practices for climate change and other
It is difficult to grasp the market demand for future products or services WNC’s operations, downstream customers Short-term Stay informed about international trends, customer goals, and industry practices to invest in relevant technology research and development. Provide customers with products and services that meet their expectations.
Customers begin to prefer or reject specific products and services WNC’s operations Short-term Stay informed about international trends, customer goals, and industry practices to invest in relevant technology research and development. Provide customers with products and services that meet their expectations.
Primary Opportunities Low carbon products or services WNC’s operations, downstream customers Short-term Launching low-carbon environmental-friendly products leads to increased revenue. Allocate research and development resources to communications product technologies while simultaneously implementing energy-saving and green design concepts to enhance the competitiveness of said products.
Products or services that contribute to climate adaptation and climate solutions WNC’s operations, downstream customers Short-term Expanding the application scope of network communication products brings new business opportunities. Align with the global trend of low-carbon and net-zero emissions and explore potential applications for wireless communications technologies (e.g., products relating to Mobility as a Service).
Innovative processes that change the way services are provided WNC’s operations, downstream customers Short-term
Provide more low-carbon products and services WNC’s operations Short-term
Innovative processes that change the way services are provided WNC’s operations, downstream customers Short-term Developing low-energy technologies or systems can help reduce production costs. Develop low energy consumption technologies or systems, such as using low-temperature reflow solder paste and implementing Firmware Over the Air (FOTA) technologies.

Risk Management Process

Business units and function units within WNC examine and identify risk items in various aspects and issues in accordance with the existing organization structure, internal controls and management mechanisms, and their respective responsibilities. The process for identifying climate-related risks and opportunities is as follows:

Establish risk/
opportunity lists

During internal discussions of each working group, the scope of which includes WNC’s major global production locations (Taiwan, China, and Vietnam), potential risks and opportunities are listed, and impact and likelihood assessments are conducted.

Identify material risks/ opportunities

The Sustainable Development & Marketing Division compiles the work results of each group and ranks the results through comprehensive review of their impact and possibility. The Division completes a risk/opportunity matrix diagram, which summarizes the major risks/opportunities based on the risk matrix.

Formulate management strategies to analyze financial impacts

The working group whose responsibilities are related to the risk item formulates appropriate management policies and action plans according to the impact and likelihood of the major risks/opportunities summarized in the risk/opportunity matrix. The groups further analyze and judge these items through scenario analyses, determining whether the corresponding response measures can effectively control and reduce the impact of the risk on WNC’s operations and finances.

Metrics and Targets

To avoid potential risks caused by the inability to effectively control greenhouse gas emissions, including failure to meet customers’ expectations for a low-carbon supply chain, the need to pay carbon taxes regulated by governments, and damage to its brand value, WNC has adopted the concepts of energy conservation in factories and use of renewable energy and green product design as the two main focuses of carbon management. For details on how WNC has set its carbon reduction and GHG indicators and goals in accordance with climate risks, refer to the Getting to Know WNC section in this Report.

Energy conservation in plants and use of renewable energy

Green product design