［ESG Taiwan STAGE EP03］ ESG Integration for Taiwanese Companies with Aakansha Lam

Q1. Can you advise a general strategic roadmap for the Taiwanese companies to reach the net zero goal? What’s their major job, their major strategy right now? And probably we can also talk about a circular economy. But tell us first about their major strategy right now to reach the ne zero goal.

Aakansha Lam:
Thank you for that question. Like you rightly said, I mean, right now, Taiwan faces an energy security risk at climate risk, and a lot of the companies in Taiwan, including the names you mentioned and the semiconductor giants here, they have started recognizing the need for a net zero action plan, and Taiwan itself has a very ambitious 2050 net zero goal.

I think as companies start recognizing that financial risk is associated with climate change, it’s very important that they begin by having the right people on their boards, which begins by hiring people having the right expertise that understands the climate risk, the market risk and overall sustainability action and agenda to be able to make meaningful contribution and implementation strategies. I think what we are finding right now across the globe, as well as in Taiwan, is quite ambitious sustainability targets being set up, but there is an increased need for companies to be able to have targeted measurement and verification plans to be able to reach those net zero goals.

So other than having the right mix of people on their boards that are tackling such agenda, it is very important that Taiwanese companies now focus on data verification and measurement as one of the most important milestones to be seen in their ESG journey. And one way they can do that is by adopting science-based targets.

About thousands of companies across the world have now adopted science-based targets. We now have a global standard for net zero action for companies and goals. There are even sector specific roadmaps for textile industry, for other manufacturing industries. So, we can address these issues.

I think it’s important that once companies start to recognize that, OK, there are science-based targets on these resources on net zero action plan, they can look into their own scope: scope I, scope II, scope III emissions and really account for their entire supply chain and internal, as well as external operations to account for the emissions that they have. I think once they begin that journey and have the right M&V processes, the Measurement and Verification, like I was calling about to achieve those targets. It will be more and more feasible for other companies to adopt this.

We have seen the big names come up a lot, like, TSMC forming its own net zero agenda and they are now a part of RE-100, which is another global action initiative to take this into account. But I think as we see more larger companies adopt this, what is important is to also not forget about small and medium sized businesses in Taiwan and the gaps that exist for them to be able to implement these targets. We must remember that a lot of these verification and certification processes are quite data intensive. They are quite resource intensive. So not a lot of times it’s possible for much smaller and medium sized enterprises to be able to implement these strategies, which I believe that a number of other larger enterprises and corporations and stakeholders can set an example and also the resources and the road map necessary to be able to reach Taiwan’s net zero goals.

Q2. Mrs. Lam, what do you think about the ESG goal, ESG journey related to the circular economy? How can we have a better performance to have a better carbon reduction by circular economy? Mrs. Lam?

Aakansha Lam:
Sure. Taiwan, I believe, has one of the highest recycling rates in the world. You know, not just on a consumer level basis, but like you mentioned, the manufacturing companies here have taken strides in recycling, but recycling alone is not enough for a circular economy. What we really need to do to close the loop in the entire supply chain is, to be able to take those reuse materials to put them back into the market and have a regenerative system like that. So, I think several companies are now adopting regenerative approaches, but they are consumers. And I’m seeing a lot of that, not just with the textile manufacturing industry, which gets more talked about with respect to circular fashion or circular economy, but as well as manufacturing industries.

The recent event, I was attending is Go Green with the Blue. This was one of the events that was hosted by the Taiwan Circular Economy Promotion Office. One of the highlights I remember from that event was that increased focus on waste to energy conversion and the importance of manufacturing sector, especially the semiconductor industry, to be able to adopt some of those practices for a circular economy. So, you can apply those circular economy principles not just to products, but as well as larger infrastructure such as energy. This is one of very important topics because, like I was mentioning earlier about Scope III emissions, it’s important to be able to kind of consider those emissions if we really want to achieve a circular economy. And accounting for those emissions, like I was saying, is a challenge and has been a challenge historically. So let us see how and what great progress comes together. As you know, more and more stakeholder engagement and participation continue to happen in Taiwan.

Q3. So, I think competing with many countries, they also have problems about new green energies. What’s your comment about the Taiwan’s energy policy including the government and the industries? How can we make it better about this kind of big problem?

Aakansha Lam:
Sure. Happy to address that question, Louis. As I first came in 2017, I noted that the previous year, 2016, Taiwan had just revised its energy policy. Honestly, we have seen a lot of progress since then, but I feel like somewhat with respect to the zero action or net zero goals for 2050 and even the 20 percent goal for 2025. It seems like the progress is going slow and the COVID 19 certainly hasn’t helped with respect to that.

We see a lot of great photos and progress about wind farms, and the wind energy sector has gained a lot of traction in Taiwan. But what’s important for Taiwan to remember because of its population density and limited land capacity it also has other forms of renewable energy as well, in which Taiwan has a head start in, for instance, in geothermal energy. There has been significant investment and attraction from abroad in the geothermal energy space.

At the same time, we also have options for floating solar. Although this is because of the land mass and the population density, like I mentioned. It’s not possible to develop solar farms here at scale. Now the government has decided that, OK, we cannot phase out nuclear power. It’s important to remember that Taiwan is still heavily reliant on coal and fossil fuel for most of its energy needs. When I say that Taiwan faces an energy risk, I do mean that the country itself needs to focus more broadly on defining its mix of renewable energy to some extent that has been done in the net zero action and the agenda that has been put forward.

There is a lot of skepticism in the market about how we will reach those goals because often we see the regulatory aspect is important, but that alone is not sufficient to reach our targets here. So, to my earlier point about waste to energy conversion, that’s something that private companies can invest in and explore greater energy efficiency measures. These are some low hanging fruits that can also help us get towards Net-Zero, and this should not be ignored while we focus completely on one or other form of renewable energy.

There is also the factor that gets very less talked about is with respect to decarbonization of the entire economy or supply chain. You cannot exclude LNG (Liquefied Natural Gas) and natural gas from that. I think the transportation sector when we talk about having a good and resilient EV (Electric Vehicle) infrastructure for scooters in Taiwan, that’s extremely important as well to reach that net zero goal.

So, what I’m trying to say is what we need here is more collective action and not think about energy systems and silos. Energy is a type of infrastructure that’s necessary to be considered as a system wide approach. We need to be able to if you’re talking about transportation sector, we need to talk about the supply chain, the fuel, the consumer part of it, the education part of it. So, I think it’s very, very critical for all stakeholders to come together, which is why I was extremely glad to actually come on your podcast today because stakeholder participation like the work that you are doing with ESGWD is extremely critical to bring these conversations to the forefront.

I believe that once the focus goes towards considering the systems approach to our economy, our energy sector, decarbonization and those net zero goals can be achieved, but it will need much broader participation than just a regulatory change. And however, there have been a few regulatory changes recently that have helped with that. For instance, the Renewable Energy Certificate market, has opened opportunities for corporations and companies here to participate in the market more broadly. I know that DTCC has also launched its ESG dashboard. That happened about two years ago or in 2020 some time.

So, I would encourage more and more companies here to move forward with their climate related disclosures and move forward in their ESG journey by stepping towards seeing how they can participate in those markets as well.