Enforce Scope 1 and 2 GHG Emissions Reduction

• Enhanced renewable energy utilization 

LITEON is committed to increasing the utilization rate of renewable energy and reducing its carbon emissions. The company achieves this by increasing the amount of renewable energy it uses and its yearly proportion of renewable energy in its energy mix. LITEON accomplishes this by reducing its energy use, installing rooftop solar power systems, and procuring International Green Electricity Certificates. The company is dedicated to achieving low-carbon production and actively seeks out renewable energy companies to sign long-term green power purchase agreements (PPAs). In 2023, LITEON has already used and purchased renewable energy certificates. The company's renewable energy consumption using I-REC has reached 85,495 MWh, accounting for 28.3% of its total electricity consumption.

• Energy Management

LITEON continues to improve the efficiency of energy use, improves equipment and adopts different energy-conservation methods in energy use; it increases production output while saving energy, improving production efficiency. In 2023, a total of 10 production sites will continue to operate under the ISO 50001 energy management system. The company expects to cooperate with energy-conservation plans to reduce electricity consumption for production and improve production efficiency. It established a demonstration site for the implementation of the process pilot plan, introduced power analysis tools, digitized the power consumption of intangible processes, generated a power model of the utility and process system, and the power consumption analysis diagrams of production processes, finding out the optimal control scheme for power consumption, and improving efficiency of energy use.

In 2023, a total of 40 energy-conservation plans were implemented, with a total energy savings of 15,553 MWh. Among them, the primary contributors to energy savings were air compressors, air-conditioners/chillers, and process equipment, accounting for 70% of the total energy savings.

• Enforcing GHG Emissions Reduction

LITEON not only improved energy efficiency, but also made many improvements in Scope 1 reduction to continuously adapt and reduce GHG emissions. The highest proportion of LITEON's Scope 1 GHG emissions is the basic emissions of employees (i.e.,septic tanks), followed by refrigerant, gasoline, diesel, and fire equipment. We have been switching to electric equipment for years to reduce Scope 1 GHG emissions including replacing diesel forklifts with electric forklifts and natural gas or gas heating system of dormitories was replaced by a solar power heating system.
LITEON developed production optimization and plant operation improvement and continues to reduce energy by implementing many energy-saving measures. The measures included updating air-conditioning electricity management, introducing inverters, managing processed equipment technology and introducing management system and other energy-saving plans to enforce energy
saving and operational equipment efficiency improvement. For 2024, LITEON has outlined 37 energy-saving measures and plans to reduce electricity consumption by around 19,800 MWh.

• Strengthened internal carbon pricing strategy

LITEON continues to actively adjust the governance aspects related to sustainable operations and a sustainable environment. It has established an Environmental Sustainability subcommittee, which is chaired by the head of manufacturing. The subcommittee is responsible for promoting green operations to improve environmental management performance and environmental risk controls. In 2018, LITEON referred to relevant regulations on carbon trading in Taiwan and the market price of carbon trading in China and adopted the shadow price method to set the carbon fee price as the decision-making for its energy-saving and carbon-reduction measures. In addition to the overall SBT carbon reduction target, LITEON also sets the SBT emission intensity target and determines an internal carbon price to replace the shadow price every year starting from 2020. In 2023, a carbon price of 1 USD/ton of carbon dioxide equivalent was maintained, and the business units were subjected to internal carbon fees in case they exceeded their annual carbon emission quota. This method strengthens business units' decision-making on carbon reduction investment, and it expects to gradually increase the fee in the future as an investment in carbon reduction technology or to support renewable energy work to achieve LITEON's carbon reduction commitment.

Scope 3 GHG Reduction Measures

• Develop Low-carbon Products

The LITEON CSR code of conduct is based on life cycle thinking. With the 3Rs rule adopted, the company engages in green product design and develops nontoxic, easy-to-assemble/disassemble, and environmentally friendly products. For example, the optimized circuit design improves the energy conversion efficiency of power products (power supplies for servers and 3C products, etc.) and reduces energy consumption, material consumption and carbon emissions. In LED and energy-saving street light products, energy consumption is reduced by improving energy efficiency and light extraction efficiency. Furthermore, by using low-carbon recycled materials, improving packaging technology, and extending product life, based on shipments in 2023, the overall reduction of carbon emissions in the product use phase is approximately 795,831 tons. The cumulative carbon reduction due to the green product design reached 802,447 tons of CO₂e. Please see Green Product Management for more information.

• Collaborate with the Supply Chain to Achieve Scope 3 GHG Reduction

LITEON has identified the supply chain as a vital partner in reducing greenhouse gas (GHG) emissions, guided by TCFD principles. We support our supply chain in establishing carbon inventories and reduction strategies, enhancing their carbon management capabilities through long-term engagement.

In late 2021, we launched the "Supply Chain Green Transformation Project," designating 2022 as the first year for supply chain carbon reductions. To date, 116 suppliers have participated, receiving tailored guidance to build their GHG inventories and product carbon footprints.

From 2021 to 2022, we implemented the Supply Chain Energy Conservation System Counseling Project, involving 18 suppliers. This initiative included online courses and on-site support from consultants, focusing on energy-intensive equipment. We identified 120 improvement recommendations, leading to potential electricity savings of 16.6 million kWh, an average savings of 5.06%, and an estimated carbon reduction of 8,451 tons.

In 2023, we initiated a two-year "Low-carbon Sustainable Supply Chain Integration and Establishment Project" with 30 suppliers, managing carbon inventory data through a digital platform. By 2024, we will reduce carbon emissions by 4,000 tons, aiming for an additional 10,000 tons reduction by 2025.

LITEON introduced Project 555 in 2023, targeting a 5% carbon reduction in the supply chain and planning to incorporate a bonus point mechanism for supplier evalsuations. Our goal is to achieve a low-carbon transformation in collaboration with our suppliers.

Adaptation to Physical Climate Risks

Extreme weather events, such as flooding and typhoons, can interrupt production processes. To mitigate these risks, it is essential to routinely maintain and inspect drainage systems to protect production equipment and operations during severe weather conditions. We will enhance the management of drainage systems in the factory area. Furthermore, our risk assessment and adaptation strategy for physical climate risks will extend to all new operations. This includes a comprehensive assessment of possible climate impacts, the creation of resilience strategies, engaging with stakeholders, conducting regular monitoring, and ensuring alignment with our overall business strategy.