Environment

Climate Risk

As extreme weather has become a common occurrence in recent years, energy conservation and carbon reduction are not just a corporate slogan; it is an important indicator for fulfilling corporate sustainability responsibilities. In addition to identifying operational risks, Alltek also adopts the Task Force on Climate-Related Financial Disclosures (TCFD) issued by the International Financial Stability Board (FSB) to disclose climate-related financial information in four major areas: “governance, “strategy,” “risk management,” and “indicators and targets” to disclose climate-related information so that the Company can understand its risks and opportunities associated with climate change issues and to mitigate and adapt to the operational impacts of climate change.

Fraework for Disclosure of Climate Change-related Risks and Opportunities

 

 

 

Governance

With respect to the governance structure of climate change related risks, the Company’s Board of Directors is the top unit for risk management, with the objective of complying with laws and regulations and promoting and implementing the Company’s overall risk management. The Board of Directors has a clear understanding of the risks faced by the operations in order to ensure the effectiveness of risk management and assumes the ultimate responsibility for risk management. Under the Board of Directors, a “Corporate Sustainability Committee” has been established, and a “Corporate Governance and Risk Management Team” has been established under the Board of Directors. The Chief Corporate Governance Officer serves as the convener and assesses four major types of risks: operational risk, financial risk, information security risk, and environmental risk (climate change). The risk management reports of each unit are regularly reviewed to track the progress of implementation and improvement to be submitted to the Corporate Sustainability Committee.

The Corporate Sustainability Committee reports the implementation of risk management policies to the Board of Directors on a yearly basis, proposes necessary improvements, and sets the priority of risk control according to the changes in the internal and external environment and the resolutions of the Board of Directors.

 

 

 

 

  Strategy

The Company pays close attention to the trend of global climate change and the direction of international response, and incorporates this as a major issue of corporate sustainability which is continuously analyzed and controlled. The key points of each strategy are summarized as follows:

  1. Greenhouse gas (GHG) inventory and verification: To meet the needs of the competent authority, we have gradually completed the GHG inventory and third-party verification of all offices and warehouses.
  2. Distributor and sale of low-carbon products: Regularly evaluate the distributorship of suitable green component production lines; continue to pay attention to market demand and low-carbon issues, and promote green component product lines to customers.
  3. Enhanced climate resilience: Cargo is regularly monitored during the rainy season, and the cargo is subject to moisture-proof treatment to enhance climate resilience.
  4. Energy management and monitoring: Improve energy efficiency and reduce carbon emissions through the promotion of air conditioning temperature settings in offices and regular inspections of temperature and humidity monitoring equipment in warehouses.
  5. Warehousing management training: Warehouse practical training courses are used to broaden employees’ understanding of warehousing management procedures and maintain efficient distribution processes and transportation modes.
  6. Cultivation of talents for low-carbon technology transformation: Through internal and external resources, actively understand carbon-related issues and improve the Company’s awareness of low-carbon technologies.
Risk and Opportunity Management
  • Risk and Opportunity Identification Process

The Company’s risk management team is responsible for collecting information on the risks and opportunities of climate change and energy and conducting reviews each year. Consider transition risks (policy and legal/market/technology/company reputation) and physical risks (chronic and acute), and conduct risk assessments for possible events, including the degree of financial impact, impact time (short, medium and long term), impacted parties in the value chain, and the likelihood of risks.

When drafting scenarios for opportunities, we consider resource efficiency, energy sources, products and services, markets, and adaptability, and conduct an opportunity assessment that includes the degree of financial impact, the duration of impact (short, medium, and long term), the affected parties in the value chain, and the likelihood of opportunities.

  • Climate Risk Scenario Analysis

In accordance with the TCFD guidelines, the Company used the worst-case scenarios for the two risk types of transformation and entity to incorporate the analysis results into the strategic resilience assessment.

For information on transition risk, please refer to Taiwan’s 2050 net-zero emissions pathway and strategy and the EU’s Carbon Border Adjustment Mechanism (CBAM). After incorporating the relevant scenarios above, we analyze the impact on the Company from the market, technology, reputation, finance and operation.

Physical risks are estimated with reference to the Taiwan Climate Change Projection Information and Adaptation Knowledge Platform (TCCIP) and the National Disaster Preparedness Technology Center. The average rate of change in the total number of days with a single day of rainfall exceeding 200 mm from 2021 to 2040.

Note: RCPs stand for concentration pathways. In the IPCC’s Fifth Assessment Report, the “Representative Concentration Pathway” (the ROCAL route refers to the change history of concentration) is used to redefine the future change scenarios, and the difference in radiative forcing between 2100 and 1750 is used as an indicator value to distinguish them. The scenario named RCP2.6 means that the radiative forcing per square meter in 2100 will increase by 2.6W, while RCP4.5, RCP6.0, and RCP8.5 represent an increase of 4.5, 6.0 and 8.5W.

RCP 8.5 Situational Assessment Factor Taipei New Taipei Taoyuan
Temperature rises from 2021 to 2040 1.7˚C 1.67˚C 1.63˚C
The average rate of change of the total number of days in a year with a single day rainfall exceeding 200mm 75% 75% 94%
  • Risk and Opportunity Assessment

The financial impact and the likelihood of risks and opportunities are used to determine the degree of risk and opportunity. Score of 1-5 represents low risk/opportunity, 6-14 represents medium risk/opportunity, and 15-25 represents high risk/opportunity. the evaluation results are as follows:

Serial number Category of issue Potential financial impact Risk or opportunity analysis of current situation(Possible impact on the Company) Countermeasure Impact time Risk/Opportunity Grade
1 Transition risk/policy and law Increase in operating cost The government has committed to moving towards the net zero goal in the future, and the electricity mix will increase the proportion of low-carbon and renewable energy. Based on Taiwan Power Company’s estimation, if the proportion of gas and renewable energy is increased in the power generation structure, industrial electricity may face price hikes in the future. Climate change will increase the proportion of environmental management cost year by year. To fulfill Alltek’s environmental sustainability responsibilities, the Operational Support Department promotes energy management and monitoring to effectively improve energy efficiency. Short-term Low risk
2 Physical risk/chronic Increase in operating cost Climate change will affect the average temperature increase in the future. Under the circumstance of increasing heat load, it will lead to increased power consumption of chillers and air conditioners. Alltek promotes energy management and monitoring through the Operational Support Department:

1. Public notices (E-mail/intranet) are made each year to promote the optimal temperature setting (26~28°C) in the office.

2. Audit the storage location environment/temperature/humidity record sheet and industrial dehumidifier equipment maintenance card on a monthly basis to ensure the effective operation of temperature and humidity equipment.

Medium-term Low risk
3 Physical risk/acute Increase in operating cost The precision products related to chip parts and components represented by the Company have certain requirements for controlling the temperature and humidity of chips. If the intensity and frequency of typhoons and rainstorms caused by climate change in the future increase, the anomalies such as moisture damage or damage to the goods during transportation will increase. For the transportation process of high-precision products, the Company requires logistics providers to protect the goods with moisture-proof wrapping if the weather is poor or in rainy seasons to improve the safety of cargo transportation. The Company also continues to track and maintain the safe transportation insurance of the goods regularly to enhance the climate resilience. Short-term Low risk
4 Transition risk/policy and law Increase in operating cost

 

In response to the “Sustainable Development Roadmap for Listed Companies” and “Regulations Governing Information to be Published in Annual Reports of Public Companies,” the Company is required to commission an external party to assist in the inventory of GHGes and hire a third-party agency to conduct verification. To meet the needs of the competent authority, the GHG inventory of all offices and warehousing locations will be completed in 2026. At the same time, the Company is expected to cultivate talent for low-carbon technology transformation through external course resources and internal book clubs. Short-term Medium risk
5 Opportunity/products and services Increase product revenue In response to market trends, expand the scope of agency and set foot in green high-performance semi-conductor components. Such as: electric vehicles, smart electronic locks, GPS trackers, LED lighting, wireless sensing network of the Internet of Things, etc., will create revenue and gross profit growth, and improve the annual profit performance. Agency and sales of low-carbon products:

1. Actively strive for the agency rights of green component production lines to increase low-carbon product portfolio.

2. Make full use of the supplier’s reputation and trademark awareness to improve the series of low-carbon products and expand the scale of cooperation with suppliers.

3. Continue to pay attention to market demand and low-carbon issues, promote green component product lines to customers, and seek opportunities for customers to develop new products.

Long-term High chance
6 Efficiency of opportunity/resource utilization Reduction of operating costs In response to the global trend of carbon reduction, more efficient distribution processes and transportation modes have been adopted. We continue to consolidate orders and shipments to avoid individual shipments, thereby reducing carbon emissions and lowering operating costs. A warehouse management system (WMS) is used to process consolidated orders and shipments according to the customer and shipping destination. In addition, we provide training to our warehouse management staff to ensure that all staff can handle the integrated orders with the accurate control of the WMS. Short-term High chance

In the face of risks and opportunities, Alltek responds to risks and opportunities through personnel training, development, transportation management, and warehousing management. Operating expenses are expected to account for approximately 0.09% of the Company’s operating expenses.

Indicators and Targets
Strategy Future Goals
Greenhouse gas inventory and verification Completion of GHG inventory at all offices and warehousing sites in Taiwan by 2026
Completion of GHG verification for all offices and warehouses in Taiwan by 2028
Agency and sales of low-carbon products Collection of green product-related components from customers on a regular basis to strive for orders
Regular evaluation of agency rights for suitable green component production lines
Building of climate resilience Regularly monitor the rainy season and apply moisture-proof coating on the cargo
Energy management and monitoring

Public notices (E-mail/intranet) are used each year to promote the concept of energy saving in the office

Audit the storage location environment/temperature/humidity record sheet and industrial dehumidifier equipment maintenance card on a monthly basis

Warehousing management training

One “inbound and outbound flow” practical course each year

Cultivation of talent for low-carbon technology transformation

Cultivate four low-carbon technology transformation talent by 2028

Sustainable and Innovative Design

The development of sustainable and innovative products with low energy consumption and low carbon emission is not only an energy-saving and carbon-reducing trend, but also a key driving force for corporate green design and development in extreme climates around the world. Although we act as a distributor of semi-conductor, we still make an effort to use the professional and technical capabilities of the Field Application Engineer (FAE) of its Technology R&D Department to assist in providing customers with sustainable innovative technology-related product solutions, thereby assisting the industrial value chain to transform into a low-carbon, green enterprise. In the future, the Group will continue to respond to the various opportunities derived from the risks of global climate change and continue to expand the business opportunities of various green products brought about by sustainability issues.

  • A total of 66 sustainable technology-related solutions have been developed by the Group and customers in 2022.
  • The sustainable and innovative design solutions of the Company cover five major areas: Connected car development, industrial automated distribution, smart metering devices, smart home applications, and LED lighting applications.

 

  • Sustainable, Innovative Design and Development Results
Application category Development achievements
Connected car development BSD Automotive Blind Spot Detection and Assist Warning System, AVM 360-degree Driving Surrounding View Assist System, ADAS Advanced Assisted Driving System, TCU In-vehicle Information Control Unit, Electric Vehicle Motor Module, Electric Motor Vehicle Electronic Control System, OBD In-vehicle Diagnostic System, OBU Programmable In-vehicle Component, Automotive Ethernet Switch, Automotive Computer Module, Automotive Gateway, Vehicle Tracker, 60GHz Automotive Radar Sensor, 77-79GHz Automotive Radar Sensor, Electronic Rear-View Mirror.
Industrial automation transportation and distribution Unmanned trucks and GPS trackers.
Smart metering device Smart electricity meter.
Smart home applications 12V/24V electronic locks, smart doorbells with wireless network monitoring, smart home security control panels, and smart energy-saving gas stoves.
LED lighting applications LED lighting for firefighting, LED taillight for sedan, LED warning light for police, LED modified car light.

Energy Resource Management

Due to the nature of its operations, Alltek Technology does not have manufacturing operations. All statistics are based on the headquarters, offices, and the logistics and warehousing of the Taiwan base. Appropriate control measures are in place to control GHG emissions and water resource management to minimize negative impact on the environment.

Greenhouse Gas Management

At Alltek, we strive for gaining sustainable competitive advantages and winning the trust of all stakeholders in accordance with the “Sustainable Development Roadmap for Listed Companies” issued by the FSC in March 2022. The Company is a company with paid-in capital of more than NT$2 billion, and the parent company should be subject to the third stage of GHG inventory (i.e., inventory completed in 2026 and verification in 2028). The Company will continue to control the completion of the GHG inventory and the verification and disclosure schedule in accordance with the reference guidelines and applicable regulations issued by the competent authorities. The parent company’s GHG inventory and verification schedule is as follows, which has been submitted to the Board of Directors and is controlled on a quarterly basis.

Projects Expected time for completion or completed
Formulate the inventory plan December 2024
Establish a verification plan December 2025

In the fight against climate change and global warming, GHG inventory has become the basis reduction effectiveness and continuous improvement. Given this, Alltek is in line with the global trend of environmental protection and the development of the overall national GHG reduction strategy to achieve the goal of sustainable development of energy saving and carbon reduction. Although the Company is not listed as a source of GHG that should be inventoried, an independent GHG inventory is carried out based on the operational control to grasp the Company’s GHG emission volume.

With 2021 as the base year, the Group aims to reduce carbon emissions by 1% each year compared to the base year. In 2022, the total GHG emission was 254.17 tons, a 3.56% reduction from the base year, and the carbon reduction target of 1% per year from 2021 has been achieved. In the future, we will further introduce the ISO14064-1:2018 GHG inventory and obtain third-party verification to expand the implementation of carbon reduction operations.

  • GHG Data
Operating locations Year Scope 2
Ton CO2e
Total turnover (NTD million) Emission intensity
CO2e/NTD million

Office area

2021 142.28 47,134.253 0.00302
2022 143.74 60,428.396 0.00238

Logistics and warehousing

2021 121.26 47,134.253 0.00257
2022 110.43 60,428.396 0.00183
*Note 1: The emission factor is 0.509 kg CO2e/kWh in 2021 based on the standard published by the Bureau of Energy, Ministry of Economic Affairs. As the publication date of the calculation standards for the previous year (2021) was in early November 2022, the calculation standards for 2022 were temporarily based on 2021.
*Note 2: The inventory of GHG emissions from office areas covers the Company’s Taiwan headquarters and offices in Taiwan.
*Note 3: The inventory of GHG emissions in warehousing covers the Company’s logistics and warehousing in Taiwan.
Energy Management

As Alltek’s main service is to distribute IC parts and components, there is no electricity used in the production process. The head office is located in an office building, so all the energy used is electricity. The total electricity consumption in 2022 reduced by 18,417 KWH from the total electricity consumption in 2021. Energy conservation measures are as follows:

Turn off office lights for one hour during the lunch break to save energy.
The office equipment is set to the power saving mode.

For long periods of non-use of electrical appliances or computer information equipment, we instruct our employees to turn off the power of the mainframe and peripheral equipment at the end of the day to reduce the waste of standby power.

  • Electricity Consumption in the Past Two Years

Operating locations

2021 2022
Electricity Electricity
kWh GJ kWh GJ

Office area

279,533

1,006.319 282,399 1,016.636

Logistics and warehousing

238,240 857.664 216,957 781.045

Total

517,773 1,863.983 499,356 1,797.682

Note 1: The inventory of GHG emissions from office areas covers the Company’s Taiwan headquarters and offices in Taiwan.

Note 2: The inventory of GHG emissions in warehousing covers the Company’s logistics and warehousing in Taiwan.

Note 3: The energy calorific value conversion information is based on the “Unit calorific value table for energy products” of the Bureau of Energy, Ministry of Economic Affairs. Purchased electricity 1kWh = 860 Kcal; 1 Kcal = 4.1868E-6 GJ

Water Resource Management

Water is an indispensable resource for daily life. Faced with water resource challenges, we used the Water Aqueduct of the World Resources Institute (WRI) to identify pressure on water resources at our operating locations. The risk is considered to be Low Medium. However, due to the uneven spatial and temporal distribution of rainfall in Taiwan, each enterprise should make an effort to manage water resources. The Company’s water is mainly used by its employees in the office area. We continue to promote the concept of water conservation to employees and cherish all hard-won resources.

With 2021 as the base year, the Company aims to reduce water consumption by 1% each year compared to the base year. Water consumption in 2022 reached 1,504 cubic meters, a decrease of 2.33% from the previous year (base year). The water reduction target of 1% per year from 2021 has been achieved. In terms of water reduction, the Company will continue to promote the improvement of overall water use efficiency and promote water conservation information to employees.

  • Water Consumption in the Past Two Years

    Unit: cubic meters

Type of water source 2021 2022
Tap water consumption 1,504 1,469

Note 1: Except for the Operations Headquarters, water bills for the Company’s offices, logistics and warehousing sites in Taiwan are handled by the Building Management Committee, with no additional water bill collected from the Company each month. Therefore, the scope of water consumption inventory only covers the Company’s headquarters in Taiwan.

Note 2: All water intake is freshwater from third parties and does not come from water stressed areas.

Waste Management

Alltek is a specialist communications component distributor, not a manufacturer, and does not generate hazardous industrial waste. Even so, Alltek still pays close attention to waste management issues. On top of a well-defined resource recycling and sorting policy, there are recycle bins and a space for leftovers recycling on all office floors, and the company also promotes the use of eco-friendly tableware to heighten the awareness of waste volume reduction among staff. Its total waste generation in 2022 was 50.63 tonnes and waste intensity was 0.0008.

In terms of waste management, Alltek is aiming for a 1% annual reduction in waste weight from 2021 as a base year.

 

  • The volume of waste generated by the company in the last two years:

Inventory year

Waste generation waste intensity
Unit: Tonnes Unit: Tonnes / million turnover
2021 48.55 0.0010
2022 50.63 0.0008

*Note 1: The inventory of waste generation covers the company’s head office, its branch offices and logistics warehouses in Taiwan.

Green Warehousing

In addition to committing to the intelligentization of warehousing operations, Alltek also pays special attention to how to thoroughly implement environmental issues in the warehousing environment. With the goal of developing a “green warehousing” and a “circular economy,” we have implemented a number of energy conservation and environmental protection measures.

  • Introduce smart devices to create a green warehousing environment.
  • Energy saving warehouse: Our logistics warehouse is fully equipped with LED intelligent human sensor lighting, which will automatically turn on the lighting when it detects that there is a person operating in the warehousing area.
  • Intelligent warehousing: Shelf and inventory transfer are conducted by PDA scan product and storage barcode. The system will carry out accounting adjustment and storage conversion in real time without the need for inventory paper card for recording.

Alltek is committed to creating an eco-friendly and energy-saving green warehousing, and fully uses LED smart human body sensors.

Circular Economy System

The concept of circular economy is facilitated. The warehousing environment focuses on the recycling and reuse of packaging materials, and the goal is “zero waste” and “resource saving.”

  • Zero waste: There is no packaging waste generated in the warehousing environment of the Company. If products need to be repackaged after storage, all the cartons and filling materials inside are recycled at the time of entering the warehouse, to be retrieved at the time of shipping, further reducing the use of new packaging materials.
  • Resource saving: Paperless shipping has been adopted, and all documents are retained in electronic files to avoid unnecessary waste of paper.

Recycle all cartons and packing materials.

Recycled buffer materials are stored in categories and are retrieved preferentially at the time of shipment.

Measures for Consolidation of Cartons for Shipping

In the past, products that did not need to be repackaged and reshipped were mostly packaged in the original factory and shipped directly to the warehouse. Carton consolidation has been adopted since 2020. For the same product purchased by the same customer, the same product that does not fit a full case will be consolidated and packed before shipping. By doing this, we are able to increase the utilization rate of cartons and further reduce the use of packaging materials. In 2022, the carton consolidation operation saved a total of 668 cartons.

Year Cost saving Increase/decrease in cost savings compared to the previous year Increase/decrease in cost savings Saving of cartons Increase/decrease in carton savings from the previous year Increase/decrease ratio of carton savings from the previous year
Unit: NTD Unit: NTD Unit: Percentage Unit: Carton Unit: Carton Unit: Percentage
2020 62,422 Omitted; base year Omitted; base year 650 Omitted; base year Omitted; base year
2021 103,550 -41,128 -65.89% 737 -87 -13.38%
2022 139,881 -36,331 -35.09% 668 69 9.36%

Note 1: As the product attributes of the Taoyuan bonded warehouse are not applicable to the carton consolidation operation, the scope boundary of the consolidation data only covers Alltek Technology’s Xizhi Warehouse in Taiwan.

Note 2: “Cost saving” refers to the savings in domestic freight, external freight and carton charges for the Xizhi Warehouse from the consolidation operation. As most of the goods in Xizhi Warehouse are light in weight, the “volumetric weight” is adopted for the calculation of shipping cost instead of weight. The fewer the boxes, the lower the volumetric weight and the lower the shipping cost.