Sustainability reporting is constantly evolving. The foundations of environmental, social, and governance (ESG) are grounded on Socially Responsible Investing (SRI) and built up to the highly anticipated International Sustainable Standards Board's approach.
The hope is that, in the coming future, ESG data will be on par with financial data in terms of quality, consistency, and comparability.
"ASE believes that ESG metrics allow us to comprehensively evaluate our entire business operation in terms of our sustainable value creation and ability to mitigate climate risks. These, I think, are key ingredients to improving the long-term growth and viability of the company," stated Peggy Liu, the Director of ASE Corporate CSR, in an email to DIGITIMES Asia.
In this interview article, DIGITIMES Asia reveals how ASE structured its ESG narrative through a combination of ESG frameworks and standards.
The chosen ESG standards and frameworks
According to Liu, ASE has adopted several international standards and frameworks such as General Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Dow Jones Sustainability Indices (DJSI), CDP, and plans to publish its first and foremost Task Force on Climate Related Financial Disclosures (TCFD) report this year.
The chosen framework from ASE
Source: Compiled by DIGITIMES Asia, June 2022.
Reasons are the pillars of the mind
DIGITIMES Asia asked, "Why does ASE choose this specific set of frameworks or standards?"
Liu said, "The standards such as SASB and GRI provide companies and investors with qualitative and quantitative information that can measure a company's long-term sustainable performance and corporate value."
Further, "These standards guide companies in reporting both sustainability and financial information that satisfy the needs of stakeholders and the investor market. It also helps the company make a wide range of decisions," she added.
The latest GRI Standards consist of two categories, namely universal standards, and topic-specific standards.
The GRI Standards may provide the inner layer, the so-called "blueprint of a company's ESG report," while the Sustainable Development Goals (SDGs) form the outer layer. Its key concepts include impact, material topics, due diligence, and stakeholders.
Below are the figures from ASE’s Sustainability Report to aid in understanding the ESG reporting:
ASE started the "GHG emission management" section with an overview of its net-zero GHG emissions action plan in a qualitative descriptive manner. According to ASE report, ASE is taking a systematic approach that includes participating in the Science Based Targets initiative (SBTI), committing to net-zero GHG emissions for all offices by 2030 and all manufacturing facilities by 2050. It has also joined the Taiwan Institute for Sustainable Energy's Net-zero Emission Alliance to pledge its commitment to Net-zero 2030/2050 as well as working very closely with the Taiwan government and the local industry to address energy demand.
Next, ASE disclosed more specific metrics on measurement such as GHG emission ratio, emission category, intensity, and more in a quantitative manner. (Please refer to the below image)
Source: ASE Sustainability Report, p. 80.
Then, ASE shared the results of the implemented action plan in the "Means of Reduction" column.
For instance, it has been increasing its renewable energy usage and reached 18% of the total electricity consumption by 2020. There were also 300 energy saving projects executed by ASE and have accumulated a total of 585,744 tCO2e of carbon reduction. (Please also refer to the following charts.)
Source: ASE Sustainability Report, p. 81.
Another example, for companies in the semiconductor industry, SASB provides the following guidance:
Gross global Scope 1 emissions and the amount of total emissions from per fluorinated compounds in the quantitative form.
Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets in the qualitative form.
A company's materiality assessment is the process by which management determines what information should be disclosed in its ESG report.
The SASB materiality matrix was adopted by ASE to provide a more specific understanding of what material needs to be covered in the report. This is accomplished by connecting each of the "key categories" to a particular SASB metric.
SASB materiality matrix
Source: ASE Sustainability Report, p. 146.
ASE disclosed its greenhouse gas emissions according to the code, TC-SC-110a.1's requirement:
Source: ASE Sustainability Report, p. 146.
This best exemplifies a company should not only disclose positive and negative impacts but also do so to achieve true transparency.
CDP and DJSI
ASE is one of the few global technology companies to be recognized on two of the world's leading corporate environmental transparency standards: CDP and DJSI.
Although it has won six times as "the Semiconductor Industry Leader", ASE is still continuously adapting its ESG strategy to meet the needs of various countries and localities they operate in.
In other words, ASE is not using both CDP and DJSI to compete with its peers, but as a self-check tool. They pledge to always adapt and evolve when they are needed to keep up with changes in the environment.
TCFD focuses on scenario analysis, which allows ASE to make the best decisions based on different future outcomes. This gives the semiconductor assembler and tester an 'artificial' idea of how the proposed situation may play out and start preparing for it in advance. It also helps them to put together a strategy and mitigate possible risks and uncertainties.
DIGITIMES Asia is looking forward to discovering how ASE will be going to combine this 'last piece of the puzzle' in their sustainability report, as a whole.
Smooth seas don't make skillful sailors
ASE is a large corporation with locations on three continents that have many resources spread out. There is a complex integration of those resources, and when data has to be shared between sites, the communication often gets challenging.
"It's also important that we integrate the strategic vision of ASE's senior management with the industry trends of the future to establish our ESG indicators," Liu said.
To address the complexity of ESG reporting, ASE has established a Corporate Sustainability Committee (CSC).
The CSC is the highest level of authority in the planning and supervision of sustainability-related strategies, and it facilitates the accomplishment of sustainability management policies and the objectives of the subsidiaries, according to Liu.
Led by the company's chairman and top-level management, the CSC drives the performance and reporting of ESG issues across all operations and time zones.
At the execution level, ASE has the Corporate CSR Division that coordinates resource integration and site expertise across all subsidiaries to formulate top-down and horizontal ESG strategies.
Within each subsidiary company, there is a Corporate Sustainability Committee headed by a senior-level executive that is tasked with identifying key ESG issues, annual presentation of performance and results, and reviewing the progress of meeting various short-, medium-, and long-term sustainability objectives.
Annual CSC meeting with the respective task forces. Credit: ASE
Current and Future State
ASE is embarking on long-term research and development of carbon reduction technologies and net-zero transition.
It has been proactively collaborating with industry partners on carbon reduction programs including technology sharing, cross-industry cooperation, and infrastructure development.
By increasing the use of renewable energy, enhancing electricity efficiency, and developing a diversified power supply portfolio, ASE hopes to reduce the time needed to achieve low-carbon transformation.
"Our goal is to reduce absolute Scope 1 and 2 greenhouse gas emissions by up to 35% by 2030, reducing absolute Scope 3 greenhouse gas emissions by up to 15% by 2030 from a 2020 baseline, and achieve net-zero GHG emissions for offices and manufacturing facilities," said Liu.
Solar panels at ISE Labs (ISE is a subsidiary company of ASE, an IC testing house based in Fremont, CA). Credit: ASE
As for the social dimension, ASE has recently created a social enterprise that aims to develop sustainable programs. These programs will be developed with the help of science, technology, and stakeholder participation.
More particularly, the social enterprise will be launching environmentally friendly projects, daycare centers for the elderly and needy, and offering products and services that contribute to sustainable social development.
ASE's case showed all the responsibilities a company should commit to in the new sustainable era, including a deep understanding of the different standards around ESG and frameworks, a clear attitude towards being good with ESG both on the inside and out, taking action for ESG implementation, and reporting both impacts that are positive and negative.
If ESG data providers' future quality is as high and consistent as their financial data, as these quality data increases, the impact of sustainable green practices will only become greater.