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Climate Change

Samsung Electro-Mechanics aims to become carbon neutral
by 2050 by recognizing and responding to the climate crisis.

Climate Change Response Strategy

Samsung Electro-Mechanics is committed to participating in efforts to address the climate
change crisis facing humanity, while understanding and responding to its impact on us.

Key activities

Samsung Electro-Mechanics has made it a priority to achieve carbon neutrality by 2050 and is
participating in efforts to combat climate change through greenhouse gas reduction activities.

    • We established an energy management system (ISO50001) and are managing energy reduction activities at all domestic and overseas business sites.
    • We analyze energy increase and decrease factors each year and set targets to carry out reduction activities.
    • We included energy use management in management evaluation items to internalize energy reduction efforts within the organization.
    • We operate an Energy Reduction Task Force, which is organized with members from various departments,
      including development, manufacturing, and infrastructure.
    • Starting at the manufacturing sites, we work to streamline the operation of facilities related to production volume, manage the use of sleep mode, and identify energy-saving initiatives.
    • Bimonthly meetings organized by the CSO are held to review energy consumption and the status of energy reduction tasks at each business site.
    • We analyze critical utility facility loads to increase energy efficiency through consolidated/differential supply.
    • We utilize waste heat generated during the operation of utility facilities to reduce energy consumption through heating only.
    • We increase energy efficiency by managing the status of idle equipment and supplemental operations in response to changes in daily production.
    • We joined RE100 in 2022 to achieve carbon neutrality and are working towards RE100 in 2050.
    • We are considering introducing a direct renewable energy Power Purchase Agreement (PPA) business using underutilized land at our business sites.
    • We aim to convert 100% of our car fleet to electric vehicles by 2030.
    • We are creating an environment where employees can use electric vehicles more conveniently by building electric vehicle charging infrastructure in parking lots at domestic business sites.
    • We are responding to climate change by focusing on investments and operations in the environmental energy sector, including the conversion of high-efficiency facilities to reduce electricity consumption and the introduction of process gas reduction facilities to reduce greenhouse gases.
    • We provide training on performance analysis and efficient operation of pure water, boilers, chillers, etc. to help operators improve their basic energy efficiency skills and provide training for energy managers in each department on calculating the effectiveness of energy saving projects.
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Risk and opportunity analysis

Samsung Electro-Mechanics analyzes risks and opportunities from climate change by categorizing them into directly operated business sites, upstream, and downstream in accordance with the risk and opportunity requirements of the TCFD Recommendation. As a result, the price of greenhouse gas emissions, the strengthening of climate change reporting requirements, and the strengthening of customers’ climate
change-related behaviors have been identified as key conversion risks, and heat waves and rising average temperatures have been identified as key physical risks. Key opportunities include the use of low-carbon energy sources, and the reduction of water use and consumption in production processes.

Risk and opportunity analysis - Climate change risks and opportunities, Anticipated financial impact, Response direction
Climate change risks and
opportunities
Anticipated financial impact Response direction
Conversion
risks
Increase in the price of
GHG emission credits
  • Increased cost of purchasing credits in response to the Emissions Trading Scheme
  • Reduce the amount of credits purchased through GHG emission reduction activities
  • Set renewable energy use targets and monitor policies
Tighter climate change
regulations
  • Reduced revenue from product sales due to increased climate change regulations on products
  • Achieve low carbon product certification
Increased climate
change action by
customers
  • Increased costs due to renewable energy transition requests
  • Reduced revenue if requirements are not met, such as responding to ESG assessments, joining RE100, etc.
  • Monitor renewable energy markets/policies, direct generation/purchase of renewable energy
  • Reduce energy consumption through energy reduction initiatives
  • Respond to customer requirements such as ESG assessment, RE100 membership, etc.
Increase in raw material costs
  • Higher energy costs due to tighter regulations on fossil fuel use
  • Reduce energy usage and costs through energy reduction initiatives
  • Reduce costs by using low-carbon fuels, switching to renewable energy, and more
Physical
risks
Reduced productivity due to climate disasters, including transportation damage, supply chain disruptions, etc.
  • Increased operating costs due to damage to production/infrastructure facilities at business sites
  • Reduced production due to disruption of raw material supply due to damage to suppliers and transportation facilities
  • Minimize damage to business sites by establishing a climate disaster emergency response system, regularly assessing the age of facilities, etc.
  • Diversify raw material suppliers
Increased average
temperature
  • Increased power consumption for office cooling due to rising average temperatures
  • Monitor power consumption and optimize room temperature
Opportunities Reduced water usage and consumption in the manufacturing process
  • Reduced water purchase costs due to reduced water usage
  • Create a water/wastewater reuse improvement plan
Utilization of low-carbon energy sources
  • Reduced GHG emission credit purchase costs due to reduced GHG emissions
  • Adopt direct renewable energy development facilities on business sites
  • Monitor renewable energy markets/policies and set mid- to long-term usage targets
Changes in consumer preferences for products with low carbon footprints
  • Increased revenue from growing demand for low-carbon products
  • Consider energy efficiency when introducing new product manufacturing facilities
  • Drive R&D to produce low energy products
  • Obtain low-carbon product certifications
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Risk management process

Samsung Electro-Mechanics identifies and assesses climate change risks at all of its business sites by conducting financial impact surveys based on physical risk factors at each site, analyzing policy trends, and analyzing peer companies. It also identifies climate change risks that may occur at the operational level through emission projections that reflect expansion lines and future production. The company-wide GHG emissions status is reported to senior management once a year, and through the company-wide Energy Council, we share energy consumption and reduction projects by site and check implementation to promote GHG reduction activities.

A process for integrated, enterprise-wide opportunity and risk management
Risk identification
  • Identify physical, policy, and regulatory risk factors
  • Understand the level of risk and financial impact
Risk assessment
  • Survey the financial impact of physical risk factors
  • Perform risk assessments based on policy trends and peer analysis
Risk management
  • Plan and implement GHG reduction activities
  • Monitor the occurrence of natural disasters at key logistics hubs
    (ports, airports, production/sales entities)
  • Forecast emissions intensity to reflect on expansion lines and future production
Follow-up actions
  • Integrate company-wide climate change risk management based on energy management system
  • Operate a company-wide climate strategy committee (once a quarter)
  • Manage risks through ESG committee reporting on major climate change risks
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Indicators and reduction targets

Climate change response management indicators

Samsung Electro-Mechanics manages indicators such as greenhouse gas emissions (GHG), greenhouse gas emission intensity, energy consumption, waste generation, and water consumption to respond to climate change. To internalize climate change risk management, both management and employees are actively considering safe environment related elements across the business, including safe environment-related items in the regular performance evaluation system for executives. Samsung Electro-Mechanics will continue to develop environment-related performance indicators and supplement the evaluation compensation system in the future.

Greenhouse gas and energy reduction goals

Samsung Electro-Mechanics aims to achieve carbon neutrality by 2050 by reducing overall greenhouse gas emissions. To this end, despite internal changes such as the establishment of new business units and the expansion of factories in overseas subsidiaries, and market variables such as the increasing demand for automotive and electronic components, we have been reducing emissions by continuously implementing energy-saving projects each year. In addition, Samsung Electro-Mechanics strives to achieve its GHG reduction targets by streamlining production and utility operations each year and replacing equipment with
high-efficiency equipment at major facilities. In 2022, Samsung Electro-Mechanics joined RE100 and is working to transition to 100% renewable energy by 2050. In addition, we are working to reduce Scope 3 emissions by reducing business travel and promoting remote video conferencing.

Disclosure of Scope 3 GHG Emissions

Samsung Electro-Mechanics transparently discloses data on Scope 3 GHG emissions generated throughout its operations to manage GHG emissions across the value chain. We also strive to improve data reliability through third-party verification.

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