Corporate Social Responsibility

Innolux follows the Climate Change Adaptation Strategy released in Taiwan and acts in accordance with the greenhouse gas reduction plans of the government. One of the responsibilities of the Company’s CSR Committee is to collect information associated with climate change and to keep a close watch on the risks and opportunities brought by climate change. Each year, plans are made and the KPIs are defined to review the effects of adaptation measures and reduce risk in the external environment and management. In 2018, a total of NT$410 million was invested in climate change risk management. NT$240 million of that amount was spent on the installation of solar panels for solar rooftop leasing, and the funds were paid for by the vendor.
Climate Change Risks and Opportunities

I.Disasters
Risk Opportunity
Temperature and rainfall pattern changes result in increased sedimentation in reservoirs in Taiwan, leading to decreases in effective water storage. The security of water resources deteriorates as a result of the increasing difference in wet and dry season rainfall volume. Moreover, floods and droughts caused by weather anomalies also jack up corporate management risks. Reinforce water resource management; develop alternative water resources by improving water quality control, recycling water, and strengthening water supply system management.
Conduct strategic dispersion of procurement risks by creating a business continuity management organization to analyze the impacts of natural disasters on managing the Company, and plan and exercise emergency response measures to increase customer confidence.
Hold regular meetings with science park administrations, water companies, and irrigation associations to discuss changes in the water supply and emergency response measures; the Company has signed a letter of intent in response to the Plan for the Use of Recycled Water established by the Tainan City Government and the Southern Taiwan Science Park Bureau to stabilize the water supply.
 
II. International Conventions and Domestic Laws and Regulations
Risk Opportunity
The Environmental Protection Administration has announced the Criteria for Greenhouse Gases Discharged from New or Modified Emission Sources to establish future total GHG emissions volume control Inventory the emission volume at each site and include all sites, except for module plants, in the total emission volume control; adopt feasible measures in the future to reduce emission volumes in compliance with related laws and regulations.
The Environmental Protection Administration has announced the amended Regulations for Issuance of Incentives for Businesses with Greenhouse Gas Emission Sources Complying with Performance Standards, the Regulations Governing Establishment of Greenhouse Gas Exchange Programs, and the draft Standards of Performance of Greenhouse Gas Emission Sources to give carbon credit incentives to businesses with outstanding performance in voluntary carbon emissions reductions. Fab 3 and Fab 8 have made plans to apply for greenhouse gas exchange, and the credit incentives obtained will be used against total emission volume control requirements or carbon exchanges in the future.
Pursuant to the Regulations on Establishment of Energy-saving Targets and Execution Plans by Energy Users, users with a contract capacity exceeding 800kW are required to achieve at least a 1% average annual power-savings rate between 2015 and 2019. In 2018, 12 sites in Taiwan were required to report their annual energy use and all sites met the standard set by the competent authority. The average power-savings rate was 1.1%, proving that the Company had the capacity to achieve energy cost reductions.
According to Article 23 of the Tainan City Self-Regulatory Ordinance for a Low-Carbon City, users with a contract capacity of 800kW or higher are required to install solar photovoltaic systems able to produce at least 10% of the contract capacity at appropriate locations in the city, and such facilities shall be completed within three years after the ordinance is publicly announced. The Tainan Site met the conditions set forth in the ordinance and was obligated to complete installation within three years. In June, 2018, a power meter was officially installed and device capacity was 5546.1kWp
In 2018, the solar power generated at the Taiwan and mainland China sites totaled 24,336,490kWh, increasing the accumulated total power generated since 2012 to 74,023,278kWh.
The 13th Five-year Energy Conservation and Emission Reduction Plan is being promoted in mainland China. Total energy consumption control, key energy conservation measures, and reductions in the emission of major pollutants have an impact on company management. In 2018, the Foshan Site achieved its emission reduction target of 0.57kg coal equivalent/piece, meeting the 0.67kg coal equivalent/piece regulation set by the Guangdong Province Commission of Economic and Information Technology.
  
III. Company Reputation and Changes in Consumer Behavior
Risk Opportunity
Carbon emissions labels have been adopted to set an international trade threshold to promote closer upstream-downstream cooperation in supply chains for carbon reductions to help supply chains comply with the carbon emissions requirements set out in the Paris Agreement.
Many members of the RBA are customers of Innolux. The RBA requests that supply chains disclose carbon emissions volumes and energy data and enhance carbon management and energy management planning.
Innolux releases its CSR report annually and participates in the Carbon Disclosure Project (CDP) to ensure that stakeholders can understand the Company’s climate change management achievements. The Company has been awarded a B rating in carbon management (climate change) and a B rating in water resource management.
By promoting low-carbon logistics through improvements in transportation and management, the Company reduced carbon emissions by 955,054 tCO2e in 2018 (vs.2012), and 493,134 tCO2e (vs. 2017) respectively.
The 2018 supplier greenhouse gas emissions inventory showed a reduction of 136,513 tCO2e, achieving our annual target of 135,000 tCO2e.
Climate Change Mitigation and Management

Greenhouse Gas Inventory
Innolux has conducted greenhouse gas inventories in accordance with the ISO 14064-1 standard with third party verification for 14 years.
 
In 2018, seven major greenhouse gases were inventoried, including CO2, CH4, N2O, HFCs, PFCs, SF6, and NF3. The standards were defined in accordance with the IPCC 2006 Guidelines. Since emissions due to power consumption accounted for 85%±5% of total emissions, the carbon emission coefficient of power consumption was updated according to actual conditions. As result, the Company’s emissions volume was affected. For this reason, Innolux adopted a rolling base year. The inventory performed in 2018 indicated Scope 1 emissions totaling 0.369 million tCO2 and Scope 2 emissions of 3.232 million tCO2e.
 

 
Item Description
Scope 1
Direct GHG Emissions
Inventory Scope: Qualitative and quantitative inventories of FCs with greenhouse effect potential, including SF6, NF3 and CF4, fuels for common service systems, VOC control equipment, and other greenhouse gas emission sources
Emissions: 0.369 million tCO2e in 2018
Scope 2
Indirect GHG Emissions
Inventory Scope: Qualitative and quantitative inventories of purchased electricity and thermal energy.
Emissions: 3.232 million tCO2e in 2018
Scope 3
Other Indirect GHG Emission
Inventory Scope:
2018: 0.006 million tCO2e carbon emissions resulted from waste transportation, incineration, and burial in 2018.
2018: 0.008 million tCO2e carbon emissions resulted from business trips (airplanes) and commuting (company buses).
Greenhouse Gas Reduction

Greenhouse Gas Emissions Reductions
The CO2 equivalent of FCs emissions during the TFT-LCD production process at Taiwan sites was 0.0823MMTCE (million metric tons of carbon equivalent) in 2018, a decrease of 14.7% compared to 2017. If the new T6 Site is also included, total emissions in 2018 were 0.0838MMTCE, 13.2% less than the year before.
 

 

The power and greenhouse gas management indices for the mainland China sites are shown in the table below. The overall average power consumption per unit area was only 21.08 kWh/m2.

 

Innolux continues to reduce Greenhouse Gas emissions to help relieve and mitigate climate change.
 
Since 2010, Innolux has been reducing PFCs emissions at TFT process by the following means: installation of high efficiency local scrubber, and process improvement- reduce or replace the PFCs gas with lower GWP material. From 2012 to 2016, the PFCs emission per input substrate at TFT process reduced from 0.0168 ton CO2 e/m2 to 0.0129 ton CO2 e/m2 , which demonstrated a 23% reduction.
 
To further realize Innolux% reduction.PFCs emissions at TFT process on, a 9-year PFCs reduction target is established. With baseline year at 2016, we target to achieve a 30% intensity reduction in PFCs emission per input substrate at TFT process by 2025, the emissions is expected to reduce from 0.0129 ton CO2 e/m2 to 0.0090 ton CO2 e/m2
 
PFCs emissions reduction at TFT process
 
Baseline Year Emissions in Baseline Yea Target Year Emissions in Target Year Reduction % Current status
2016 0.0129
ton CO2 e/m2
2025 0.0090
ton CO2 e/m2
30% Install 3 new L/S at Fab 3 in 2016
The PFCs emission intensity in 2017 was 0.0103 ton CO2 e/m2
 

The Carbon Disclosure Project (CDP)

Since 2003 when the Carbon Disclosure Project (CDP) launched its Climate Change Program, thousands of businesses have been invited to disclose data, risks, and opportunities associated with their carbon management. Innolux has been given an A- rating in supplier engagement and a B rating both in climate change management and water management, indicating that, besides business management, the Company also values communication and cooperation with other members of the supply chain as part of a joint effort to mitigate the impact of climate change.
As a result of increasing concern among industries about the management of climate change and water resources, the key targets of the CDP evaluation have been extended from data disclosure to cover management strategy disclosure and consolidated reports. In the future, Innolux will move in this direction to keep up with the global trend.