Climate Change Strategy

 

 
 

Renewable Energy Strategy

 

 

Science-Based Targets initiative (SBTi)

 

 
 

Simplo signed the “SBTi Commitment” in 2021 and submitted the carbon reduction target in 2022. Simplo sets emissions reduction targets in line with a 1.5°C future, and Group’s near-term emissions reduction targets are approved by the SBTi in May 2023 (note1). Simplo is the first company in the global battery module manufacturing industry to pass the review. Simplo commits to reduce absolute scope1 and 2 GHG emissions 51% by 2030 from a 2020 base year. Simplo Technology also commits to reduce absolute scope3 GHG emissions from purchased goods and services 25% within the same timeframe. In the future, Simplo will actively take carbon reduction actions, including: introducing the ISO 50001 management system, installing solar PV systems, signing renewable energy power purchase agreements, designing green products, using recycled materials, etc. At the same time, key suppliers will be included in the emission inventory and emission reduction actions, implement carbon reduction goals, and built a sustainable partner co-prosperity ecosystem.
 

Simplo Group Carbon 2050

 

 
Note：1.The data coverage of Simplo Group includes the headquarters and subsidiaries of the consolidated financial statements.
2.*Purchasing goods and services classified according to the GHG protocol.
3.This near term target follows 1.5ºC path and has been certified by SBTi.

Internal Carbon Pricing (ICP) Strategy

Facing the generation of low-carbon emission or zero-carbon emission, the international community has promoted carbon fees and Carbon Border Adjustment Mechanism (CBAM), which will increase the carbon cost burden of the industry. Carbon risk management has become an important topic for companies, and companies are also aware of the profound impact of carbon risks on operations, thus launching the ICP mechanism. Simplo is committed to implementing the sustainable strategy blueprint, moving towards the goal of low carbon emissions or even net zero carbon emissions. In order to accelerate the group's carbon reduction actions, Simplo actively develops an ICP mechanism and tracks the international carbon trading market as reference for internalize external costs. Valuation of carbon emissions promotes the reduction of carbon emissions in the group's internal activities. In addition to developing low-carbon processes in the manufacturing process, it can also encourage employees to implement energy conservation and carbon reduction in their work, and strengthen the company's low-carbon culture.

 

Carbon Disclosure Project (CDP)

In 2023, Simplo Group was be awarded a “B” raating by CDP. According to the CDP guidelines, a B rating indicates that a company is showing some evidence of managing its environmental impact. At the same time, CDP announced the results of the 2023 Supplier Engagement Rating (SER), and Simplo Group was rated "A-", which shows that our carbon reduction management efforts and action results are both affirmed by international evaluations.

Task Force on Climate-Related Financial Disclosures (TCFD)

Simplo Group references the core elements of TCFD for disclosing information related to “climate governance, strategy, risk management, and goals”. This helps assess climate-related risks and opportunities affecting business operations, formulate strategies and actions to address climate change, enhance transparency in disclosure, and implement corporate climate governance effectively.

Core elements

Item

Description

1.Governance

(a) Board of Directors supervision methods
(b) Management roles

1. Regularly report on the results to the Board of Directors:
The Board of Directors serves as the highest decision-making body for climate risk management, supervising and guiding the Company’s climate strategy and the progress of climate-related objectives.

2. Material issue management:
The management regularly reviews climate risk issues, incorporating them into material issue management through the operation of the CSR Sustainability Committee.

2. Strategy

(a) Climate-related risks and opportunities
(b) Impact of climate-related risks and opportunities on the organization's business, strategies, and financial planning
(c) Climate scenario analysis

1. According to the internal risk control and management timeline, short-term is defined as 1 to 3 years, mid-term as 3 to 5 years, and long-term as 5 to 10 years. Collect stakeholder needs and climate change issues accordingly.

2. Assess climate change scenarios and evaluate related risks and opportunities based on the TCFD framework.

3. Risk management

(a) Evaluation process
(b) Management process
(c) Risk management system

1. Referencing ISO 31000 risk management guidelines, establish a quantitative risk assessment method. Utilize the operation of a risk working group to conduct risk assessments, enabling risk monitoring and management.

2. Risk identification process:
(1)Establish a risk working group composed of managers and above from various departments. This group will report its operations to the Board of Directors.
(2)Conduct inventory and verification of Scope 1, 2, and 3 GHG every year.
(3)Launch product lifecycle inventory and improvement of critical areas.

4. Indicators and targets

(a) Indicators for assessing climate-related risks and opportunities
(b) GHG emission volume Goal implementation review

1. Passed the review of the SBTi (1.5 ℃ near-term) target, using 2020 as the base year, aim to reduce absolute Scope 1 and 2 GHG emissions by 51% by 2030. Additionally, reduce absolute Scope 3 emissions related to “purchased goods and services” by 25%.
2. Joining RE100 and committing to use 100% renewable energy in global operations of Simplo Group by 2040.
3. Conduct annual organizational ISO 14064-1 GHG inventory and verification to review progress towards carbon reduction targets.
4. Continuously engage with suppliers to achieve supply chain management goals.


I. Financial impacts and response to climate-related risks

Type

 Climated-related risks Potential financial impact Response actions

Transformation risk

Policies and regulations
1. Carbon pricing: Carbon fees/taxes
2. GHG
3. Electricity conservation requirements for large consumers

Responding to regulatory requirements leading to increased operational costs

1. Energy conservation and carbon reduction solutions
2. ISO 50001 continuous improvement
3. Installation of renewable energy (PV)
4. Purchase renewable energy certificates

Technology
1. Investment in new technology
2. Costs of low-carbon transformation

1. Customers request the use of renewable energy
2. The increased cost of developing low-carbon products
3. Costs incurred from new process development

1. Low-carbon technology transformation and introduction of low-carbon processes
2. Management of circular resource use and reuse
3. Responding to international ecolabelling requirements

Market
1. Changes in customer behavior
2. Market information uncertainty
3. Increased raw material costs

1. Customer and market demand changes affecting orders
2. Uncertainties such as green inflation

1. Assessing new markets for green transformation
2. Developing energy storage business to meet market demand

Reputation
Impact on the Company's image

Inability to meet customer or stakeholder expectations leading to revenue decline

1. Increase stakeholder trust
2. Enhancing transparency of disclosure of sustainability information
3. Engaging deeply in external communication with stakeholders
4. Strengthening external ESG performance evaluations

Physical risk

Immediateness
Extreme weather led to an increase in abnormal rainfall and droughts

1. Decreased production capacity or disruptions (e.g. shutdowns, transportation difficulties, supply chain interruptions)
2. Impact on the workforce (e.g. health and safety, absenteeism)

1. Enhance emergency response capabilities
2. Ensuring safety inventory in the supply chain to avoid supply chain disruptions

Long-term
Extreme variability in climate patterns

Chronic climate change (e.g. average temperature rise/sea level rise)

1. Enhance emergency response capabilities
2. Ensuring safety inventory in the supply chain to avoid supply chain disruptions


II. Financial impacts and response to climate-related opportunities

Type

 Climated-related opportunities Potential financial impact Response actions

Resource efficiency

Improve operational management efficiency

1. Enhance resource usage efficiency
2. Increase production capacity and increase revenue

Introducing post-consumer recyclable plastic materials (PCR) and reusable packaging materials (Tray)

Energy sources

Using low-carbon energy and evaluate participation in the carbon trading markets

1. Reduce the risk of GHG emissions
2. Increased investor confidence, enhanced reputation, and higher demand for products and services

1. Energy conservation and carbon reduction solutions
2. ISO 50001 continuous improvement
3. Installation of renewable energy (PV) in the plant
4. Purchase renewable energy certificates

Products and services

1. Increasing opportunities for low-carbon products and services
2. Enhancing R&D and innovation through a low-carbon economy
3. Diversification of business activities

Harnessing the advantages of new technologies to enhance the performance of various products and achieve market-leading energy efficiency

Meeting climate adaptation needs through innovative solutions to increase revenue

Resilience

1. Improve the adaptability and resilience of business operations
2. Use high-efficiency raw materials to reduce costs

1. Assess supply chain operational capabilities
2. Develop new products and services to increase revenue

1. Increase R&D capacity and continuous innovation
2. Develop energy storage market

Greenhouse Gas Inventory

Based on the environmental concept of sustainable development and fulfilling corporate obligations, Simplo is actively committed to the inventory and control of greenhouse gas emissions, thereby slowing down global warming. We expect to maintain the sustainable development of the global environment through management and conservation of energy resources. Simplo is currently not subject to the mandatory declaration of greenhouse gas emissions. In order to comply with international trends and customer requirements, Simplo passed the SBTi carbon reduction target compliance review in May 2023, actively demonstrating its determination to help the world control global temperature rise within 1.5°C. Since 2021, Simplo has introduced the ISO 14064-1: 2018 greenhouse gas inventory system. Every year, we conduct an inventory of the previous year's greenhouse gas emissions to monitor the carbon emissions of the group's important operating bases, and it has been verified by a third-party.
In 2023, the significant increase in Scope 2 emissions from purchased electricity was due to adjustments in hydroelectric power contracts at the China plant, which were not internationally recognized as renewable energy sources. Additionally, the electricity emission factor increased from 0.5703 kg CO2e/kWh to 0.5942 kg CO2e/kWh. Furthermore, the slowdown in demand from the NB market in 2023 led to a decrease in revenue and production volumes, resulting in an increase in carbon intensity.

Direct and energy indirect GHG emissions (Scope 1 and Scope 2)

Item Unit 2020 2021 2022 2023

Direct (Scope 1) GHG emissions

ton CO2e

2,355

1,997

1,911

1,949

Indirect (Scope 2) GHG emissions

ton CO2e

127,178

84,391

13,568

26,179

Total GHG emissions

ton CO2e

129,533

86,388

15,479

28,128

Emission intensity

ton CO2e / NTD million in revenue

1.52

0.90

0.16

0.33

Emission intensity

kg CO2e / PCS

0.50

0.32

0.08

0.16

Note
1. The disclosure scope of the data in the above table is the parent and subsidiary companies of Simplo Group's consolidated financial statements.
2. The inventory is done with the operation control. The figures of the GHG inventory are certificated by third-party.

 


 

  

Other indirect GHG emissions (Scope 3)

Simplo has established a GHG inventory and assesses the significance of the items in the C1-C15 categories by GHG protocol. Based on the significance of the analysis results, 7 categories were included in the inventory items, and verified by a third party in accordance with ISO 14064-1. The item with the highest emissions is the purchased goods and services in 2023, accounting for 90%, which is a key item for the subsequent reduction. 

 

 
Scope3 Category 2023 carbon emissions (ton CO2e)
C1 Purchased Goods and Services 261,635
C3 Fuel- and Energy-Related Activities (Not Included in Scope 1 or Scope 2) 11,840
C4 Upstream Transportation and Distribution 5,559
C5 Waste Generated in Operations 70
C6 Business Travel 816
C7 Employee Commuting 1,000
C9 Downstream Transportation and Distribution 8,957

Note：
1. The disclosure scope of the data in the above table is the parent and subsidiary companies of Simplo Group's consolidated financial statements.
2. Including GHG protocol categories 1, 3, 4, 5, 6, 7, 9.