Climate Adaptation
Climate Adaptation
In signing support for TCFD, the Chairman & CEO of AUO specifically mentioned in the statement that
“Facing climate emergency, the greatest challenge of sustainable development, AUO is proud to support climate-related financial disclosures and transparency, and strengthen stakeholder trust for the Company's sustainable development. That is why we would like to play a part in the low carbon economy, respond to the opportunities and the challenges of the energy transition by developing a solar energy business, and applying our core technologies to improve the resilience of the human lifestyle and value chain creation."
AUO TCFD Framework
2019-2020 Climate Risk and Opportunity Matrix
Using TCFD's recommended framework, AUO has identified and ranked climate-related risks/opportunities. Climate risk and opportunity-related research reports from international institutions are also taken into consideration, where risk/opportunity scenarios are identified and defined through group discussions at the Company's internal TCFD annual meeting. Next, cross-organizational teams will assess climate change risks and corresponding contingencies to determine the potential risks and opportunities of climate change.
Legend color: represents the categories of financial impact
.Personnel: Due to incidents affecting attendance, labor shortage, and employee disability
.Machines and equipment are damaged or scrapped, resulting in asset loss and reduced availability
.Raw Materials: Operating costs of the product caused by loss of quality and delivery schedule or price increase due to weather Loss of Semi-finished Products: Scrap loss due to abnormal basic supply of water and electricity Energy Resources (water and electricity): supply prices increase
.Laws and regulations compliance costs, fines and penalties, penalty for breach of contract Necessary operating expenditure costs under compliance with laws and regulations
.Loss of inventory caused by unsalable products due to transformation of product market mechanisms
Loss of profit due to decline of industry/product/capacity competitiveness
Loss of production capacity due to factory operations and supply chain disruption
2020-2021 Risk Items, not yet financially quantified
- Responding to the circular economy and waste-related issues
- The impact of solar panel recycling-related regulations and response measures
- Brand customers' carbon reduction demands (carbon footprint reduction)
- Climate causes an interruption in the transport network
- Increasing insurance cost due to frequent natural disaster
氣候風險與機會說明
Transformation Risk
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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The insurance industry's quantified management of natural disaster risks causes decreasing asset values and increasing insurance costs
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO customer
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More consumers are inclined to purchase low carbon circular products, hence brand values can be fostered by focusing on this aspect. Furthermore, the EU has already begun planning the relevant regulations of circular products
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO customer
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Brand customers demand the supply chain to reduce carbon emissions in response to the carbon reduction trend
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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The carbon tax has been levied for AUO's Singapore site, increasing the cost of indirect energy and operations.
PS. The risk item has been concluded |
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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Recently implemented by Taiwan's EPA, most of AUO's manufacturing sites will face total emissions restrictions and increased operating cost
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO customer
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As the need for renewable energy rises domestically and abroad, the government's regulations and green supply chain stipulate the installation or use of renewable energy
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO supply chain
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Customer requirements for green products exceed that of local and international regulations. Stakeholders expect better environmental protection performance from the enterprise
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Physical Risk
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO customer
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Solar panels that have fallen due to the weather (typhoon) cannot be recycled (loss or injury sustained by the public)
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO supply chain
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With accelerated global climate change in recent years, the likelihood of typhoons, torrential rains, flood tides, and seawater intrusion is increased, causing interruptions in the regional transport network, production, and operations
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO supply chain
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The blackout caused by extreme weather, water supply interruption, factory, equipment damage, and supply chain interruption, resulting in delays/interruptions
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO supply chain
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Chronic climate change causes increased probability and severity of floods and droughts; continuous high temperature in summer causes risk of restriction on power due to load instability
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Strategic planning and risk management
Risk
Opportunity
Financial Impact
Opportunity
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Customer, New business
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Minimize energy cost and generate smart production business opportunities through the energy management system, big data, and AI applications
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO Suppliers
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Verify technology through R&D, use recycled materials in the display panels to foster circular values of the products
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Customer, New business
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Reinforce water resource management to mitigate the operational impact and facilitate new business service opportunities
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Investor
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Incorporated the use of renewable energy to reduce carbon emissions, conforming to the current trend and responsible investment efficiency
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, carbon credit Buyer
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Decrease the impact of cap and generate other service opportunities through carbon trading
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, customer
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Through R&D, we can design low energy consumption display panels to minimize carbon emissions during usage and enhance the customer's brand performance
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, insurance industry
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Review insurance and claims‘ impact on production due to various climate change and environmental disasters to minimize the loss of properties
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, investor, those with needs
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Manage renewable energy market, focusing on those who have signed the international agreement (RE100) or Taiwan’s Renewable Energy Development Act to provide renewable energy service
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Transformation Risk
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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The carbon tax is levied in the Singapore factory area, and the electricity rate of indirect energy is increased, resulted in an increase in operating costs
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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The Taiwan Environmental Protection Administration plans to implement it in recent years, and most of AUO‘s manufacturing factory area will face total emission restrictions and increase operating costs
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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As the domestic and international demand for renewable energy increases, the policies and laws and regulations and green supply chain requirements shall be set or use renewable energy
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO Customer
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Customer requirements for green products exceed that of local and international regulations. Stakeholders expect better environmental protection performance from the enterprise.
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Physical risk
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO Supply chain
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Production is delayed/disrupted due to power outages (pressure drops), water supply anomalies, plant and equipment losses, and supply chain disruptions caused by extreme weather events
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO Supply chain
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Chronic climate change causes increased probability and severity of floods and droughts; continuous high temperature in summer causes risk of restriction on power due to load instability
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Strategic planning and risk management
Risk
Opportunity
Financial Impact
Opportunity
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Customer, NGO
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Reduce dependence on water resources through manufacturing transformation to realize the vision for sustainability
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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Investment in the solar business and promote market for green power
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Provide an integration ability for the construction of turn-key solar power plants
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Customer
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Track market trends to ensure continuity of supply then satisfy customer requirements to improve satisfaction with sustainable products and services
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Banks, Shareholders
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Investors invest in ESG or solar-related businesses in accordance with green finance and Equator Principles
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO、Customer
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In response to the impact of climate change, the government passed alternative energy through various incentive measures to reduce the amount of traditional energy demand and carbon emissions
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO、Value chain
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Create new business opportunities by responding to reduction targets and energy policies in each country
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Transformation Risk
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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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
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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Implementation is planned by Taiwan EPA. Most AUO manufacturing sites will soon face emission controls that increase the operating costs.
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Customer
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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
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO,
Customer |
Customer requirements for green products exceed that of local and international regulations. Stakeholders expect better environmental protection performance from the enterprise.
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Stakeholder | Challenges and Opportunities | Management Approach |
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Investor
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Rise of ESG investment where investors select their investment products based on non-financial performance indicators
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Physical Risk
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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Changes in rainfall would cause a prolonged period of water shortage and present challenges to production water supply
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Stakeholder | Challenges and Opportunities | Management Approach |
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Supply Chain
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Develop the ability of the supply chain to adapt to or mitigate heightened probability and severity of disasters such as storms, floods and droughts
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Strategic planning and risk management
Risk
Opportunity
Financial Impact
Opportunity
Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Customer, NGO
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Reduce dependence on water resources through manufacturing transformation to realize the vision for sustainability
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO
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Investment in the solar business and promote market for green power
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Provide an integration ability for the construction of turn-key solar power plants
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Customer
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Track market trends to ensure continuity of supply then satisfy customer requirements to improve satisfaction with sustainable products and services
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Stakeholder | Challenges and Opportunities | Management Approach |
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AUO, Banks, Shareholders
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Investors invest in ESG or solar-related businesses in accordance with green finance and Equator Principles
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