Climate Change Strategy

LITE-ON pays close attention to the ways global climates are changing and to how the world is reacting to this phenomenon. The company sees climate change as a major risk and an important opportunity. LITE-ON follows TCFD recommendations on climate related financial disclosures and makes climate related financial statements one of the means of stakeholder communication. The company also works on adapting to and mitigating the effects of greenhouse gases and performs analysis and management of internal energy consumption on an ongoing basis as a proactive approach to reducing greenhouse gas emission.

When setting carbon emission reduction targets, LITE-ON formally submit science based targets (SBTs) for compliance the review in 2018 in order to calculate a reasonable carbon emission reduction target for LITE-ON given the Global Carbon Budget. A set of adaptation and mitigation strategies will be deployed to significantly reduce the energy consumption of products and mitigate LITE-ON's effects on the environment.

Overall impact and challenges of climate change

LITE-ON sees climate change as a major risk and an important opportunity. The company identifies items that may be affected by potential short-, medium-, and long-term effects of climate change based on international research, industry trends, results of internal and external investigations, and its own decisions and judgments after studying the 2 Degree Celsius Scenario (2DS) and uncertainties. These items include the risk of market and technology shifts, Policy and Legal, reputation, and Physical Risks. LITE-ON also assesses the probability and potential impact of each risk and devises appropriate response measures.

Policy and Legal

Given issues such as climate change induced trends, carbon emission reduction, total emission control, and carbon emissions trading may lead to new regulations and amendments of existing ones. It push companies to strengthen the disclosure of environmental information is strengthened and implement more rigorous emissions reduction standards as counter measures. As a result, businesses are spurred to take a more active approach to carbon emission reduction and clean production, which may lead to higher operating expenses. These regulations may also lead to changes in LITE-ON's products, production processes, and business models.

Market and Technology Shifts

The effects of climate change on businesses are not limited to tighter control on greenhouse gas emission. Development of low carbon technology and a greater variety of services may influence consumer preferences for products, and changes consumer behavior. LITE-ON constantly observe climate change induced changes in market conditions and invest in research and development of low carbon, high performance green products as the long term sustainable strategy for green technology to enable timely responses to shifts in consumer preferences.

Reputation

LITE-ON's performance on environmental issues is under constant scrutiny from stakeholders. Public opinion may have an impact on brand value and cause changes in consumer behavior. In particular, negative exposure in an environmentally conscious market may alter consumer buying behavior. LITE-ON will dedicate itself to advocating corporate social responsibility, fulfilling its environmental promises, improving its environmental information disclosure and incorporating the efforts into routine management practices, and achieving sustainability to develop a positive image.

Risk of physical disasters

Effects of global climate change include rising in temperatures around the world, different rainfall patterns, and extreme weather (in terms of both frequency and severity). These effects may, in the short term, lead to flood, slopeland disaster, or drought, and cause damage to critical infrastructures, water resources, land use, coastlines, biodiversity, and health, all of which in turn have an impact on business management, employees, and supply chains.

Vision and strategy of adaptation to climate change

In terms of its climate change adaptation strategy, LITE-ON takes into account products, equipment, management and other factors, and continues to develop green design, green factory, energy management, and high performance energy creation, conservation, and conversion products and solutions. In addition, LITE-ON focuses on energy management systems, renewable energy development, and international renewable energy certificates as key strategies, and makes plans for internal carbon pricing to provide a basis for investment strategies and risk management. To start early in making preparations for potential effects of climate change, LITE-ON is implementing the following key strategies:

  1. Developing environmentally friendly and energy efficient products is the first and most important climate adaptation strategy. Examples include developing high performance power supply systems, LED components, lighting, and other energy saving products in anticipation of challenges of climate change in the future.
  2. Developing automated energy saving technologies and clean energy innovations.
  3. Expanding the scope of recycling and reuse and making plans for introduction of green energy.

Energy management strategy:

LITE-ON implements ISO50001 energy management systems, and monitors constantly energy consumption in plants and offices. The objectives are to identify potentially feasible optimization, to improve energy efficiency, to reduce consumption of natural gas, oil, and purchased electricity, and to support the campaign for automated energy saving technologies and clean energy innovations.

Renewable energy development:
LITE-ON (Changan Plant) was first to invest in installation of renewable energy. Its solar power plant is expected to generate up to 1.18 million kWH, or 2.6% of total power consumption by the plant in a year, in 2018. More efforts will be invested in the future to install renewable energy in other plants to increase the percentage of renewable energy use.

Purchasing international renewable energy certificates:
LITE-ON is Taiwan's first domestic enterprise to purchase an international renewable energy certificate from the International REC Standard (I-REC). The company purchased 15,385 thousand kWh of registered and certified I-RECs in the current year. These I-RECs would be used to offset all carbon emissions at the LITE-ON headquarters and the Jhonghe plant and part of carbon emissions at the Hsinchu plant. The process embodies LITE-ON's commitment to carbon reduction.

Internal carbon pricing strategy:
LITE-ON follows international carbon trading issues closely. The company has also started formulating internal carbon pricing plans for its own science based targets to internalize costs of carbon emission. We aim to apply the total emission control concept to set reduction targets for individual business units as part of our strategy to response the changes in the energy market after new carbon reduction and carbon trading regulations launched and reducing business risks.


Reducing Greenhouse Gases

LITE-ON has adopted ISO 14064-1 standards in its performance of annual greenhouse gas inventory since 2007. The most recent statement of verification has met the requirements for reasonable assurance consistent with the ISO 14064-3 standard from a third-party to confirm that our emission data is high-quality, reliable and honest.

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LITE-ON continually upgrades our equipment at offices and plants to achieve higher energy efficiency. In 2017, we focusing on improving the energy efficiency of lighting system, manufacturing process, air conditioning system, and be better at building management. As a result, 16,587.11 Tonnes CO2e was saved in total

Energy Consumption

Direct energy

In 2017, LITE-ON consumed 83,521 GJ of fossil fuel, equivalent to an intensity level of 0.43 GJ/NTD million. The total fossil fuel consumption is 6% decrease compared with 2016, but 2.4% higher in intensity primarily due to the decline in average sale price. Below are details on the use of fossil fuel:

  • 359.7 kiloliters of diesel was used in 2017, and about 35% lower than 549.1 kiloliters used in 2016. It is because most of our manufacturing plants in China has applied for and become a No Break Power Supply Plants to avoid cutting power. Therefore, our consumption of fossil fuels is going down.
  • 571.2 kiloliters of gasoline was used in 2017, and 9% lesser than 626.6 kiloliters in 2016.
  • 894.8 cubic meters of natural gas was used in 2017, and 13% higher than791.4 cubic meters in 2016.
  • 314.6 tons of LPG was used in 2017, and 4% lower than 327.3 tons in 2016.
  • 86.5 tons of Methyl Alcohol was used in 2017, and 7% lower than 92.7 tons in 2016.

Indirect energy

In 2017, LITE-ON's indirect energy consumption (purchased electricity) accounted for 424,134 MWh (megawatt-hours) or 1,526,881GJ, which was 0.7% or 1,986 MWh or 7,150 GJ more than 2016, and was 4.4% lower than the base year’s consumption. Steam purchased was 4,170.69 MWh or 15,021 GJ, which was 6.1% less than 2016. In terms of electricity consumption intensity, LITE-ON averaged 7.95 GJ/NTD million in 2017, which was 10.65 % increase compared to 7.81 GJ/NTD million in 2016, and 0.67% higher than in the base year. This is primarily due to the decline in average sale price and the development of automated production processes in order to help solve the labor shortage in China plants.

Total Energy Consumption

In 2017, LITE-ON totally consumed 1,625,423 GJ of energy, and 895 JG higher than 2016 while posting intensity of 8.46 GJ/NTD million, 10.19% higher than 7.68 GJ/NTD million in 2016 due to the reason mentioned above.

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