Act on Climate Change

Environmental Sustainability

Taking climate action, systematic forward-looking management

In the face of global climate change and to keep the temperature rise below 2℃, we look at corporate growth risks and potential market opportunities and we actively prepare for and face the challenges.

AUO CSR EPS / SDGs

AUO CSR EPS Goals	SDGs
E ENVIRONMENT Water Optimization Realize the goal of environmental sustainability through low-carbon production and resource recycling in the value chain	SDGs list
E ENVIRONMENT Energy Optimization Realize the goal of environmental sustainability through low-carbon production and resource recycling in the value chain	SDGs list
E Environmental Sustainability Climate Adaptation Realize the goal of environmental sustainability through low-carbon production and resource recycling in the value chain	SDGs list

Carbon 2020

In 2015, the Carbon 2020 plan to reduce carbon emissions by 1 million tonnes over 5 years was proposed. A product life-cycle approach was to be taken to reduce carbon emissions through materials design and selection, localized purchasing and 4R strategy, energy-saving production, green transport and low-power panels. Cumulative progress reached 142 millon tonnes in 2019 with 2% coming from green transport and logistics, 29% coming from green manufacturing and 69% coming from product innovation.

142

million tonnes CO₂e

product innovation 69%
green manufacturing 29%
green transport and logistics 2%

SDGs 2025 carbon reduction target

The impact of climate change on the world's regional economies, countries, industries and even individuals has become increasingly deep and serious. Therefore, in the SDG13 climate action target of 2025, AUO set a both direct and indirect active carbon redcution goal: The emission reduction target is based on life cycle, continue to reduce carbon emissions by a cumulative 6.5 million tonnes of CO2e. It is expected by expanding the scope of impact and driving more active carbon reduction efforts to allow the organization moving toward smart manufacturing technology enhancement and product / service transformation, and attending the absolute carbon emissions reduction by the entire organization.

Climate Change Governance

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Climate Change Governance

Organization

It was set up by the CSR Committee and was headed by VP of Manufacturing Group to monitor trends and integrate resources.

CSR Committee

Carbon Energy Working Group

Emission reduction

SDGs

Targets

Set reduction targets based on life-cycle and reduce carbon emissions by up to 6.5 million CO₂e cumulatively

Management Approach

Respond to the global consensus on climate change through reduction targets based on life cycles. In addition to organizational carbon reduction targets, embrace carbon emission management that encompasses the Scope 3 value chain including supplier reduction, design of low-energy products, materials reduction and other elements.

Risk Adaptation

SDGs

Targets

Increase the resilience of climate adaptation and continue to reduce the risk of financial impact from Climate Change issues

Management Approach

Conduct an inventory of risks and opportunities associated with climate change using the TCFD framework including supply chain disruption management due to physical risks, market strategies for transformation risks and monitoring of regulatory trends. Identify and respond to potential financial losses in advance through a systematic identification process.

Resource Platform

SDGs

Targets

Establish a platform for the sharing of internal and external resources to boost the incentives for technology and innovation

Management Approach

Build consensus on climate change action among all employees by establishing performance rewards, professional training and system platforms for energy-saving and carbon reduction. Engage with external stakeholders to create more opportunities.

Policies

AUO has defined four key strategic directions in climate change management: Transparency, Action, Responsibility and Cooperation.

Risk and Opportunity

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Risk and Opportunity

Climate change has global and local administrative and economic impacts. As a benchmark company, we expect ourselves to lead our supply chain partners in creating a resilient value chain, by raising implementing climate adaptation and resilience. From a financial impact management perspective, we will continue to pursue green growth and emerging opportunities.

Flowcharts

The Task Force on Climate-related Financial Disclosures (TCFD) is defining the transformation and physical risks. Each year the sizes of the risks and opportunities is reviewed.

Financial impact

We focus on key themes and when needed we assess the financial impacts and plan operational strategies, which are announced by the Chief Financial Officer in a comprehensive report.

Opportunities and management of climate risk

Transformation Risk

Policies and Laws

International Agreement

Stakeholder	Challenges and Opportunities	Management Approach
AUO	National carbon reduction commitments and policies will not only boost low-carbon production and the development of green products but also increase the responsibility and risk of carbon reduction	Continue to engage in carbon reduction management through the Carbon 2020 goals Set commitments based on life-cycles Fulfill the annual target to reduce electricity consumption by 1.5% through the continued operations of the ISO 50001 system and investment in energy-saving solutions

Emissions Control and Trading

Stakeholder	Challenges and Opportunities	Management Approach
AUO	Implementation is planned by Taiwan EPA. Most AUO manufacturing sites will soon face emission controls that increase the operating costs.	Participation in industry organizations/associations and government policy development processes Establish internal carbon pricing, engage in carbon credit management through energy-saving projects and reductions Greenhouse Gas Inventory Management Apply with the EPA for carbon credits

Technology

Renewable Energy

Stakeholder	Challenges and Opportunities	Management Approach
AUO, Customer	Increase in international demand for renewable energy, policies and the requirements of the green supply chain now require the installation or use of renewable energy	Investment in Energy Business Groups Installation of rooftop solar farms at 8 sites throughout Taiwan (goal was accomplished in 2017) Prepare for trading in renewable energy certificates

Market

Consumer Behavior

Stakeholder	Challenges and Opportunities	Management Approach
AUO, Customer	Customer requirements for green products exceed that of local and international regulations. Stakeholders expect better environmental protection performance from the enterprise.	Continue R&D into low-energy panels Development of high-efficiency solar panels Establish product environment footprint management

Reputation

Business Reputation

Stakeholder	Challenges and Opportunities	Management Approach
Investor	Rise of ESG investment where investors select their investment products based on non-financial performance indicators	Establish a corporate CSR committee to manage CSR performance Take part in international assessments such as DJSI, CDP, MSCI and FTSE to review and improve internal management behavior Share experiences with other industry groups

Physical Risk

Immediate

Change in Rainfall

Stakeholder	Challenges and Opportunities	Management Approach
AUO	Changes in rainfall would cause a prolonged period of water shortage and present challenges to production water supply	Continue to engage in water resource management through the Water 2020 goals Publicly announce the adoption of green building concepts in new factory buildings Development of 100% process water reclamation technology

Long-term

Extreme Weather

Stakeholder	Challenges and Opportunities	Management Approach
Supply Chain	Develop the ability of the supply chain to adapt to or mitigate heightened probability and severity of disasters such as storms, floods and droughts	Develop risk identification and BCP management throughout the supply chain Conduct annual supplier risk identification Develop a supplier risk map

Strategic planning and risk management

Risk

Opportunity

Financial Impact

Opportunity

Resource Efficiency

Water Resource Usage

Stakeholder	Challenges and Opportunities	Management Approach
AUO, Customer, NGO	Reduce dependence on water resources through manufacturing transformation to realize the vision for sustainability	Zero process water discharge technology to achieve 100% reclamation Established a water resource museum to promote environmental education Set up U-FRESH Technology as a new business unit specializing in circular economy products and services for water resources Participate in the government's policy-making process on water resource recycling issues

New Energy

Renewable Energy

Stakeholder	Challenges and Opportunities	Management Approach
AUO	Investment in the solar business and promote market for green power	Provide an integration ability for the construction of turn-key solar power plants

Products / Services

Low-carbon Products

Stakeholder	Challenges and Opportunities	Management Approach
AUO, Customer	Track market trends to ensure continuity of supply then satisfy customer requirements to improve satisfaction with sustainable products and services	Establish supply contract mechanism Strengthen product or service differentiation Strengthen value chain partnerships

Resilience

Expand Sources of Funding

Stakeholder	Challenges and Opportunities	Management Approach
AUO, Banks, Shareholders	Investors invest in ESG or solar-related businesses in accordance with green finance and Equator Principles	Set up a CSR committee and work actively to enhance ESG-related activities Improve transparency of disclosure on climate change and carbon management to boost the willingness of investors to make loans and promote green investment

CDP Commit to Action

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CDP Commit to Action

In response to CDP Commit to Action, we pro-actively participate in the CDP investors questionnaire response, and we reported with sincerity and transparency our climate change response measures, including a climate change governance strategy, risk identification and opportunity analysis, information regarding greenhouse gases emission volumes, reduction goals and performance, etc. Concurrently, from 2012 onward, we have concretely responded to CDP water with regard to risks and opportunities presented by global climate change and water resources .

A- grade Leader Board for Supplier Engagement Rating (SER)

B rating for water disclosure in the Management Grade of CDP

B rating for climate change disclosure in the Management Grade of CDP

Value Chain Emissions Management

Under its green management strategy, AUO endeavors to reduce its greenhouse gas emissions.

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Carbon Asset Management

Autonomous advocacy Prom carbon neutralization, creating a common prosperity circle of a low-carbon society.

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