Internal Carbon Pricing

Internal Carbon Pricing (ICP) is a mechanism by which companies internalize the external costs associated with their greenhouse gas emissions, encouraging them to incorporate carbon costs into decision-making and investment evaluations. Both the IFRS Sustainability Disclosure Standard S2 and voluntary disclosure standards such as the Carbon Disclosure Project (CDP) consider the price of internal carbon pricing and its application as information that should be publicly disclosed. According to PwC (2023)¹, the top three key objectives of implementing internal carbon pricing for companies are to promote low-carbon investments, enhance energy efficiency, and change internal behaviors.11 An increasing number of companies are adopting internal carbon pricing to achieve their carbon reduction goals. The World Bank believes that companies implementing internal carbon pricing can drive internal emissions reductions, serving as a crucial tool for companies transitioning towards net-zero emissions.

ASUS refers to the decisions of the United Nations Framework Convention on Climate Change COP and official documents from the IPCC to analyze trends in carbon pricing policies across different countries and their market mechanism design principles. By comparing various carbon pricing mechanisms and considering the European Union Emissions Trading System (EU ETS) as a global benchmark for carbon markets, ASUS aligns with the most comprehensive regulations and standards by following the EU Carbon Border Adjustment Mechanism (CBAM) and using its ETS price as the framework for internal carbon pricing assessment. This involves calculating emissions based on industry benchmarks and then allocating based on import shares. Emissions exceeding the allocated free allowances are calculated based on the average EU ETS price. ASUS's product manufacturing model primarily involves outsourcing manufacturing, where Scope 1 and Scope 2 greenhouse gas emissions are not significant, belonging to Scope 3 emissions in the value chain, with supplier emissions and product usage emissions accounting for over 90%. As a leading global green technology brand, ASUS integrates its core capabilities to promote product design and manufacturing towards decarbonization. It links carbon reduction goals verified by the Science Based Targets initiative (SBTi) and product carbon footprint calculation procedures certified by thirdparty organizations. Therefore, “product carbon footprint” serves as the basis for internal carbon pricing calculations, with the main product's internal carbon price set at $80 per metric ton of CO2e. ASUS discloses the performance of internal carbon pricing in its reports, providing the product operations department with references for tracking and managing carbon reduction performance. Considering the continuous strengthening of global decarbonization efforts, ASUS will review the development direction of EU carbon market policies and dynamically adjust assessment mechanisms and internal carbon prices accordingly.

The next stage of advancing internal carbon pricing will involve developing phased targets, linking carbon reduction achievements with operational department performance, promoting the formal collection of internal carbon fees, and establishing regulations for the management and utilization of internal carbon pricing funds. A Carbon Reduction Project Review Committee will be established to examine the feasibility of carbon reduction technologies, conduct business cost-benefit analyses, and expand the application of carbon reduction projects, such as renewable energy, energy resource efficiency, and innovative carbon reduction initiatives.
 

Low Carbon Products

ASUS quantifies the potential environmental impacts it may cause in accordance with ISO 14040 and 14044 Life Cycle Assessment (LCA) standards. In order to reduce the carbon footprint generated by our products in their lifecycle, ASUS applies a circular economy mindset into product design and services, uses eco-friendly materials, improves energy efficiency, and extends usage cycles in our transition to low-carbon product development.

1. https://www.pwc.tw/zh/topics/trends/what-is-icp.html

Supply Chain Carbon Emission Reduction

The supply chain is the major source of greenhouse gas emissions for ASUS. Analyzing more than 100,000 data entries from environmental footprint surveys over the years, we identified 90% of emission was from key suppliers in the manufacturing process, including IC base(CPU, GPU), hard drives(SSF, HDD), panels, power supplies, motherboards, memory as well as EMS. In 2023, ASUS assisted its supply chain in carbon reduction, achieving the following performance: 24% of suppliers used renewable energy (solar power), 11% of suppliers set greenhouse gas reduction targets based on Science Based Targets (SBT), 40% of suppliers obtained ISO 14064 third-party verification, and 37% of suppliers achieved ISO 50001 certification.
 

For details regarding the carbon emission reduction assistance program of ASUS supply chain, please visit Supply Chain Emission Reduction.

 

Group Subsidiary Assistance Program

Since 2022, ASUS has committed to aligning with Science Based Targets (SBT) and initiated a Greenhouse Gas Inventory Assistance Program. This program aims to establish comprehensive inventory capabilities for group subsidiaries, assisting each subsidiary in setting reduction targets and carbon reduction pathways, while integrating group-wide reduction requirements and resource allocation. In March 2024, ASUS officially launched the "A+ESG Carbon Data Management Platform." Through this platform’s functionality, which includes one-click generation of inventory lists and reports, ASUS assists group subsidiaries in accelerating their preparation for third-party external verification. ASUS has now completed the digitization platform rollout and greenhouse gas inventory guidance for the ASUS Group.

Expand the Use of Renewable Energy

Improve Energy Efficiency of Headquarters

ASUS' carbon emissions came from the use of electricity for office operations. Since 2015, we have built up the ISO 50001 Energy management system. Both of our operation headquarters have received the LEED Platinum certification, the top certification for green buildings. We aim to reduce electricity consumption by 1% each year and we have achieved the marginal benefits for improving energy efficiency. ASUS conducts regular identification of high-energy-consuming areas and equipment, performing performance measurements on items such as chillers, chilled water pumps, cooling water pumps, zone pumps, and cooling towers in air-conditioning rooms. In 2023, ASUS replaced inefficient chillers at its operational headquarters with environmentally friendly refrigerants to reduce the use and emissions of fluorinated greenhouse gases (e.g., HFCs). Additionally, ASUS implemented variable frequency temperature difference control on cooling water pumps and cooling towers, improved central monitoring systems, and anticipates an annual reduction in electricity consumption of 440,000 kWh. In 2023, the global energy consumption within ASUS’ operations amounted to 109,653.19 GJ, with a per capita energy consumption intensity of 6.71 (GJ/person), representing an 17.58% decrease compared to 2022.
 

Headquarters signed CPPA - Renewable Energy Supply Agreement

In 2023, the Headquarters signed a Corporate Power Purchase Agreement (CPPA) for renewable energy, supplying sites including the operational headquarters and the ASUS - AI and Cloud campus. Starting from January 2024, ASUS Headquarters facilities officially commenced using renewable energy, with an estimated supply volume of around 10,000 MWh in 2024. This agreement not only reflects ASUS' commitment to environmental sustainability but also reduces the organizational carbon emissions of the company. Moreover, it fosters the development of the renewable energy market, significantly contributing to driving energy transition and achieving greenhouse gas reduction targets.

Pathway of Introducing Renewable Energy

ASUS adheres to the RE100 organization's recognition of renewable energy by purchasing renewable energy technologies that are beneficial for improving the environment and reducing carbon emissions, such as wind energy, photovoltaic energy, geothermal energy, and hydropower. We are also in line with the renewable energy supply and matching system to achieve our RE100 target. In our strategies of purchasing renewable energy, ASUS will also take into consideration our global presence and the current situation of the renewable energy market before planning a phased renewable energy procurement goal, and working closely with the renewable energy industry.

By introducing renewable energy at overseas and Headquarters, in 2023, ASUS achieved RE30 across its global operations. It is anticipated that in 2024, the company will reach RE50. To keep up with the development trend of renewable energy technology, we will adjust our procurement ratio of renewable energy in a rolling manner and take into consideration the level of commercialization of new renewable energy technology, gradually incorporating it into the ASUS RE100 energy portfolio to balance the company's profit momentum and carbon reduction obligations to move towards RE100.

Innovative Technologies

According to the IEA Net Zero report, among the technologies required to achieve the 2050 net zero target, only wind power generation, solar photovoltaics, and electric vehicles are considered mature, commercialized technologies. The majority of the remaining carbon reduction technologies are still at the prototype stage, requiring further technological breakthroughs and market validation. That is why we are striving to keep up with the technological development trends and innovation feasibility, and innovation feasibility by leveraging external resources from academia and industry through our Innovation Development Office.

On the product front, ASUS actively engages in matching external startup technologies through the "ASUS and Taidah Entrepreneurship Center," selecting technologies with promising carbon reduction potential and commercial viability for analysis of their applicability, such as innovative technologies for plastic waste recycling. ASUS conducts alignment and demand assessment between ASUS and innovative technologies, providing Proof of Concept (POC) validation environments for startup concepts.

For beyond value chain carbon reduction projects, ASUS references BVCM (Beyond Value Chain Mitigation) guidelines, as detailed below:

1. Carbon credit projects for investment or procurement must adhere to ASUS’s internal carbon credit criteria, which are established with reference to reports from IPCC, The Oxford Principles for Net Zero Aligned Carbon Offsetting, ICVCM, NGO organizations, etc., to avoid greenwashing risks, all of which align with BVCM recommendations.
2. Innovative carbon reduction technologies such as carbon capture and storage, clean technology, although making significant contributions to reducing emissions beyond the value chain, are constrained by insufficient investment funds or technological bottlenecks, preventing major breakthroughs for achieving economies of scale and widespread adoption by enterprises. In light of this, ASUS continues to monitor the development of innovative carbon reduction technologies and conducts feasibility assessments for investments in small hydropower generation, hydrogen energy, and others.
3. ASUS recognizes the contribution of biodiversity richness to climate change mitigation and has planned and will collaborate with industry, government, academia, and other units to increase domestic carbon sink and biodiversity restorationrelated projects, contributing efforts to beyond value chain emission reduction initiatives.