AUO Corporation

TNFD Report2023

TABLE OF CONTENTS
1.

AUO’S TNFD JOURNEY

1

1.1

About AUO

1

1.2

Pioneering TNFD Adopter

1

1.3

SBTN and WBCSD’s guidance2

1.4

Struture of this report2

2.

GOVERNANCE

3

2.1

Board’s oversight on nature3

2.2

Management’s role on nature4

2.3

Stakeholder Management in nature issues

4

3.

STRATEGY

6

3.1

Roadmap toward nature positive6

3.2

AUO’s Strategy on Nature

7

4.

RISK & IMPACT MANAGEMENT

8

4.1

AUO’s Overall Approach in this TNFD exercise

8

4.1.1
4.2

TNFD’s Recommended LEAP approach8

Screening and Prioritization

10

4.2.1

Prioritized nature aspects

10

4.2.2

Prioritized locations

11

4.3

Locate (L)

12

4.4

Evaluate (E)

13

4.5

Assess (A)

15

4.6

Prepare (P)17

5.

METRICS AND TARGETS

20

6.

FURTHER NATURE-RELATED INITIATIVES AND OPPORTUNITIES

22

6.1

Plastic neutrality initiative

22

6.2

Invasive Species Removal Plan

23

6.3

AUO Green & Ocean Party

24

7.

WAY FORWARD

25

APPENDIX A TNFD GLOSSARYAUO CORPORATION TNFD REPORT 2023

1.

AUO’S TNFD JOURNEY

1.1

ABOUT AUO

AUO’S TNFD JOURNEY

Founded in 1996, AUO Corporation has approximately 38,000 employees worldwide and operates abusiness network that spans Taiwan, Mainland China, Japan, Korea, the U.S., and Europe. The company
outstands and diﬀerentiates itself by broad experience, innovation capabilities, and corporate sustainability.
AUO has succeeded in earning worldwide recognition for its total solutions with its strong R&D capacity,solid manufacturing expertise, and comprehensive product portfolio to meet the market's diverse needs.
Biodiversity provides rich resources and environmental services, serving as the cornerstone for thedevelopment of human society. AUO responds to international initiatives by incorporating biodiversity into
its corporate ESG governance objectives. While pursuing the development of high-quality products
through dual-axis transformation, the company also aims to shoulder its own citizen responsibility toprotect the environment. Moving towards a vision of positive impact on biodiversity, AUO seeks to berecognized not only as a panel company but also as a sustainable industry leader working with value chain
partners to protect the environment.
For more information about AUO’s sustainability strategy and climate-related disclosure, please visit our
Sustainability website and Sustainability Reports page.

1.2

PIONEERING TNFD ADOPTERAUO Corporation recognizes and aligns with the globally shared vision of achieving nature positive.
Following the release of the TNFD v1.0 framework in September 2023, we have committed to acting as a
TNFD Adopter, and start making disclosures aligned with the TNFD Recommendations in our corporate
reporting by financial year 2024 (or earlier) through identifying, assessing, and disclosing nature-related
dependencies, impacts, risks, and opportunities.
This report covers AUO's global production sites and key value chain components, featuring data andperformance from the year 2023. The report follows the TNFD v1.0 framework. Similar to the Task Forceon Climate-Related Financial Disclosures (TCFD), the TNFD recommended disclosure framework is a fourpillar reporting structure, encompassing the major components including Governance, Strategy, Risk &Impact Management, and Metrics and Targets. Figure 1 shows the major disclosure items of this TNFD
Report in relation to the four-pillar reporting structure.
Along with TNFD's published recommendations and guidance, this report also outlines the nature-related
issues identified using TNFD's LEAP (Locate, Evaluate, Assess, and Prepare) approach to be further
discussed in Section 4.1.

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AUO CORPORATION TNFD REPORT 2023

AUO’S TNFD JOURNEY

FIGURE 1： DISCLOSURE ITEMS UNDER TNFD RECOMMENDED FRAMEWORK

Reference: TNFD recommendations

1.3

SBTN AND WBCSD’S GUIDANCEIn addition to the TNFD Recommendations, AUO also adopts the recommendations from Science Based
Targets Network (SBTN) and the World Business Council for Sustainable Development (WBCSD) as theguidance for our nature-related actions.
SBTN provides guidance on science-based target settings for nature to help halt and reverse nature loss
and harness the opportunities this presents. The SBTN target-setting process is divided into five steps:
Assess, Prioritize, Set targets, Act and Track. While there are common outputs from the TNFD LEAP
approach and SBTN methods, SBTN provides further guidance on Act and Track. For the step Act, SBTN
introduced the Action Framework AR3T for company action.
WBCSD has published the Roadmaps to Nature Positive: Foundations for All Businesses to provide
guidance to businesses to address the risks of nature loss and begin their journeys to contribute to nature
positive. To help guide business action on nature, WBCSD has collaborated with SBTN, TNFD, and theWorld Economic Forum and Capitals Coalition to provide business with a consistent approach: the highlevel business actions on nature to Assess, Commit, Transform and Disclose (ACT-D), which basically aligns
with the SBTN and TNFD frameworks.

1.4

STRUTURE OF THIS REPORT

Following the recommended TNFD four-pillar reporting framework, the rest of this report presents thenature-related financial disclosures in the following structure:
Section 2: Governance
Section 3: Strategy
Section 4: Risk & Impact Management
Section 5: Metrics and Targets
Section 6: Further Nature-related Initiatives and Opportunities
Section 7: Way Forward

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GOVERNANCE

2.

GOVERNANCE

2.1

BOARD’S OVERSIGHT ON NATURE

AUO’s Board of Directors is the highest decision-making body responsible for company strategies,
corporate governance systems, and oversight of management and operations. Directly under the Board of
Directors, a committee has been established to oversee AUO’s sustainability eﬀorts. This year, the‘Sustainability & ERM Committee’ was restructured from the previous ‘ESG & Climate Committee’. This
committee, which meets at least twice per year, comprises three board members: the chairman and two
independent directors. It oversees AUO’s governance on sustainability matters related to nature (Figure
2).
FIGURE 2： DUTIES OF THE SUSTAINABILITY & ERM COMMITTEE
Sustainable Development

1.

Establish AUO’s sustainable development

Risk Management

1.

Oversee AUO’s risk management policies,

guidelines, oversee the review, tracking, andprocedures, and frameworks, and review therevision of the implementation, and provide

eﬀectiveness of risk strategies.

regular reports to the board of directors.
2.

Oversee the implementation of sustainability2.

policies and frameworks, and determining

Approve qualitative and quantitative risk
tolerance to eﬀectively allocate resources.

critical decisions on sustainability, including
technology applications, product value,energy development, green manufacturing,value chain management, civic responsibility(including human rights), risk management,
circular economy, and carbon energy.
3.

Strengthen communication with stakeholders

3.

and track their key concerns.

Implement the board of directors' decisions
on risk management, supervise AUO’s risk
management mechanisms, and approve thepriority of risk control.

4.

Ensure the timeliness and accuracy of AUO’s
sustainability disclosure.

5.

4.

Review the implementation of risk
management, provide improvement
suggestions, and report to the board of
directors annually.

Supervise other sustainability-related tasks
instructed by the board of directors.

Source: AUO Corporation 2023 Sustainability Report3

AUO CORPORATION TNFD REPORT 2023

2.2

GOVERNANCE

MANAGEMENT’S ROLE ON NATURE

To advance our sustainability vision and strategy, and to implement sustainability plans and actions, AUO
established the ‘Sustainability & ERM Executive Committee’ under the Functional Committee. The
Execution Committee comprises the chairman and nine of AUO’s first level managers (Figure 3).
Overseeing by the Sustainability & ERM Committee led by the Chairman, and with the support from the
Chief Sustainability Oﬃcer (CSO), the Sustainability & ERM Execution Committee is responsible for
integrating cross-functional strategies and allocating resources to address sustainability issues. It
convenes quarterly to discuss long-term strategies and policies, review progress towards sustainability
goals, and promote the implementation of AUO’s sustainability initiatives.
FIGURE 3： AUO’S SUSTAINABILITY GOVERNANCE STRUCTURE

Source: AUO Corporation 2023 Sustainability Report

2.3

STAKEHOLDER MANAGEMENT IN NATURE ISSUES

Currently, AUO annually assesses stakeholders’ interests in ESG issues, the operational impacts of ESG
topics, and the sustainable development impacts on external economic, environmental, and social aspects,
establishing a prioritized list of material topics for the company. Among the identified materiality topics,
nature-related issues such as Biodiversity, and Water management, and also Circular and Clean Production
which concerns reducing pollution on nature, are covered in AUO’s ESG Materiality Matrix (Figure 4) andbeing managed by the company. This demonstrates the incorporation of nature-related issues in AUO’s
overall ESG management system.

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GOVERNANCE

FIGURE 4： AUO’S ESG MATERIALITY MATRIX

Source: AUO Corporation 2023 Sustainability Report

AUO recognizes the potential connection between nature and human rights issues, with respect toaﬀected people, local communities and other stakeholders, in the organization’s assessment of, andresponse to, nature-related dependencies, impacts, risks and opportunity. Echoing with the TNFD
Recommended Disclosures on this, AUO has relevant human rights policy in place. We established the ‘AUO
Human Rights Policy’ in 2006 (the management process shown in Figure 5), aligning with international
standards such as ‘UN Guiding Principles on Business and Human Rights’, ‘Global Sullivan Principles’, ‘Social
Accountability 8000’, ‘Corporate Sustainability Due Diligence Directive,’ and ‘Responsible Business Alliance
Code of Conduct.’ AUO has implemented this policy to address both internal and external human rights
issues, conducting regular due diligence to prevent potential human rights impacts from our business
operations. For more information about AUO’s human rights policy, please visit our Sustainability website.
FIGURE 5： AUO’S HUMAN RIGHTS MANAGEMENT PROCESS

Source: AUO Corporation 2023 Sustainability Report5

AUO CORPORATION TNFD REPORT 2023

3.

STRATEGY

3.1

ROADMAP TOWARD NATURE POSITIVESTRATEGYAUO regards environmental sustainability as our core value. In 2023, we published the ‘AUO Biodiversity, Ecosystems, and Zero-deforestation Policy’ in responseto the ‘Kunming-Montreal Global Biodiversity Framework’ and the international community’s call to halt biodiversity loss. The Policy outlines AUO’s commitment tobiodiversity, underpinned by a set of policy instruments include avoiding, reducing, and restoring the impact of our business operations (Figure 6). In addition, we
announced a goal of achieving plastic neutrality by 2030, starting with our own operations and collaborating with value chain partners. Looking ahead, our longterm nature strategy aims to achieve no gross deforestation and have a net positive impact on biodiversity by 2050.

FIGURE 6： AUO’S BIODIVERSITY POLICY FRAMEWORK

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AUO CORPORATION TNFD REPORT 2023

3.2

STRATEGYAUO’S STRATEGY ON NATURE

The milestones of AUO’s strategic moves on nature are illustrated in Figure 7 below. These milestones arealso labelled as moves in relation to ‘Biodiversity’, ‘Water’ and ‘Circular production’ as biodiversity andwater are the major components in nature that AUO’s activities would impact on or depend upon, whilecircular production is a way in addressing environmental pollution that would impact on nature.
FIGURE 7： AUO’S STRATEGIC MOVES ON NATURE

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AUO CORPORATION TNFD REPORT 2023

4.

RISK & IMPACT MANAGEMENT

4.1

AUO’S OVERALL APPROACH IN THIS TNFD EXERCISERISK & IMPACT MANAGEMENT

In order to identify, evaluate and assess the nature-related dependencies, impacts, risks, and opportunities
in relation to AUO’s business, AUO has adopted an overarching approach to review the nature-related
issues that are relevant to AUO’s own operations and value chain.
The overall approach covers internal data gathering with diﬀerent AUO executive and operations
departments, for the purpose of scoping, screening and prioritization of material nature-related locations
and aspects. Subsequently, the identification and assessment of nature-related impacts, dependencies, risks
and opportunities are conducted. Lastly, actions in responding to nature-related impacts and dependencies
are framed with the AR3T framework, and metrics are determined for action tracking. The findings andimplications of the TNFD exercise are disclosed in this report and to be communicated externally andinternally, including with the board and management, so as to inform AUO’s future decisions in naturerelated governance, strategies and policies. The overall approach is presented in Figure 8 below.

4.1.1

TNFD’S RECOMMENDED LEAP APPROACH

In accordance with TNFD recommendations, AUO adopts the ‘LEAP approach’ (Locate, Evaluate, Assess,
Prepare), a four-phase integrated assessment approach designed by TNFD, as the method to identify andassess our nature-related dependencies, impacts, risks, and opportunities in the risk and impact
management processes.

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AUO CORPORATION TNFD REPORT 2023

RISK & IMPACT MANAGEMENTFIGURE 8： AUO’S OVERARCHING APPROACH TO REVIEW NATURE-RELATED ISSUES

9

AUO CORPORATION TNFD REPORT 2023

4.2

RISK & IMPACT MANAGEMENTSCREENING AND PRIORITIZATIONAs a key part of AUO's nature strategy, we have adopted the TNFD v1.0 framework released in September
2023, as well as the LEAP methodology, as tools to identify, evaluate, and assess nature-related
dependencies and impacts. Based on this methodology, when assessing the impacts and dependencies ofbusiness models and strategies, TNFD recommends to first screen both the own assets and value chain
components, and then prioritize those with potentially higher impacts and dependencies related to nature.
Considering assessment eﬃciency and data availability, priority should be given to the nature aspects andsites with potentially higher nature-related impacts and dependencies. As such, AUO has adopted theprioritization on nature aspects and locations for identifying and evaluating impacts and dependencies
covering AUO’s global manufacturing sites, suppliers representing 66% of total purchases value, andcustomers representing 46% of total sales value, as further discussed below.

4.2.1

PRIORITIZED NATURE ASPECTS

For selecting the prioritized nature aspects to evaluate, AUO uses the ENCORE tool to create a sectorlevel heatmap for our business and value chain. ENCORE is a tool developed by UN Environmental Program(UNEP) aims at helping businesses to take their first steps towards understanding their dependencies andimpacts on nature. ENCORE provides materiality of impacts and dependencies on natural capital for
sectors or sub-industries, which is informed by sector research and expert interviews, allowing users tounderstand which areas might be most relevant for further analysis.
According to the Global Industry Classification Standard (GICS) that is used by ENCORE to classify
industry sectors, AUO belongs to Electrical Component and Equipment Sub-Industry. For upstream, AUO’s
top 66% suppliers in terms of purchase are from production processes including manufacturing ofcomputers and peripheral equipment, electronic components, glass and glass products, basics chemicals
and plastics. For downstream, AUO’s top 46% of customers in terms of sales are from production
processes including manufacturing of computers and peripheral equipment, electronics, optical instruments
and photographic equipment, electronic components, and parts and accessories for motor vehicles.
According to the ENCORE results, we further consider the characteristics of the actual production
processes to correspond ENCORE’s sectorial information to AUO’s own operation and value chain. The
results are illustrated in a value chain heatmap on nature impact and dependency in Figure 9 below. In
general, AUO’s operations, as well as those of its suppliers and customers, have higher materiality in termsof impacts on nature induced by pollutants and wastes, as well as a higher materiality in dependency onnature related to water use. Although land-use change, greenhouse gas (GHG) emissions and disturbances
are also shown on the heatmap, they are not included as prioritized aspects in this report for the following
reasons:
Land-use change is only observed in one of our upstream supplier types, and the procurement amountaccounts for a relatively small portion of the entire supply chain. Considering its lower significance, it is notincluded as a priority in this report. GHG emissions, despite having a high potential impact on nature, are
not location-specific, making them incompatible with the site-specific analytical framework of the TNFD
methodology. For information on AUO’s overall footprint and eﬀorts regarding GHG emissions, please refer
to our TCFD report. Regarding disturbances, while ENCORE identifies noise as a potential medium-level
impact driver on nature for the sector, noise generation is not a prioritized concern for AUO given thecharacteristics of our manufacturing processes. In this regard, we identified ‘pollutants and waste’ and‘water use’ as the primary nature-related impacts and dependencies that are relevant for further evaluation
and assessment.

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RISK & IMPACT MANAGEMENTFIGURE 9： VALUE CHAIN HEATMAP ON NATURE IMPACT AND DEPENDENCY

4.2.2

PRIORITIZED LOCATIONSConsidering the characteristics of our business activities, AUO selected our global manufacturing sites(i.e., fabs, which have higher resource consumption and generate pollutants, making them critical locations
to understand nature-related impacts and dependencies) as the prioritized locations among all the asset
types within our own operation. Assets such as oﬃces are not selected for the evaluation. As for the value
chain, based on data availability, the top 66% of suppliers in terms of purchase value are presented by 31
site-level locations and the top 46% of customers in terms of sales value are represented by 22 countrylevel locations (Figure 10). It should be noted that the locations of the downstream customers are atcountry level only. The prioritized sites and locations are illustrated in Figure 11 below.
FIGURE 10： PRIORITIZED LOCATIONS FOR 2023 ASSESSMENT
Prioritized locations for 2023 assessment
Own operation sites
AUO’s global manufacturing sites(fab)

Upstream locations

Downstream locations

Locations (site-level) of the top
31 Tier 1 suppliers by purchasing
value in 2023 (66% of totalpurchases)

Locations (country-level) of the
top 22 Tier 1 customers by sales
value in 2023 (46% of total sales)

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AUO CORPORATION TNFD REPORT 2023

RISK & IMPACT MANAGEMENTFIGURE 11： MAP OF PRIORITIZED SITES AND LOCATIONS

4.3

LOCATE (L)The objective of the Locate phase of LEAP is to filter and prioritize potential nature-related issues byscreening the ‘state of nature’ at the sites and the business activities’ ‘interface with nature’. To identify
the information, we overlaid the geo-coordinates of the sites of assessment with four nature data layers of(1) type of ecosystem, (2) biodiversity importance, (3) biodiversity integrity, and (4) water stress (Figure12). The results provided data indicating the ‘state of nature’ at each site of the analysis, which was thenused in the Evaluate phase of LEAP.

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AUO CORPORATION TNFD REPORT 2023

RISK & IMPACT MANAGEMENTFIGURE 12： NATURE DATA LAYERS USED

4.4

EVALUATE (E)For evaluating the nature-related impact and dependency of our own manufacturing sites and key value
chain locations, AUO adopts a three-step evaluation process. First, we built up a sector-level impact anddependency heatmap using ENCORE to filter the prioritized nature aspects for AUO’s manufacturing
activities and value chain. Then, asset-level data (such as VOCs, SOx, NOx, waste, and water withdrawals
and discharge, etc.) were incorporated into an asset tagging model to determine the exposure of each site
to certain impacts and dependencies (i.e., interface with nature). Finally, the result of asset tagging was
combined with the outcome of the Locate phase to create the impact/dependency matrix. The result below(Figure 13 and Figure 14) demonstrates the evaluation of the potential level of impact and dependency of
AUO’s manufacturing sites and main supplier categories, indicating the prioritized areas of further
consideration.

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AUO CORPORATION TNFD REPORT 2023

RISK & IMPACT MANAGEMENTFIGURE 13： IMPACT AND DEPENDENCY MATRIX OF AUO’S FABS

In the impact matrix of AUO's manufacturing sites, the potential nature-related impact of each site isevaluated and presented through two factors. The X-axis represents the state of nature surrounding eachsite. Higher values on this axis indicate greater biodiversity importance or ecological integrity, meaningthese areas are potentially more sensitive to impact. For this axis, AUO considers two indicators: thedistance of each site from the Key Biodiversity Areas (KBA) and the Mean Species Abundance (MSA)
score in the surrounding 1 km areas. The Y-axis represents each site's interface with nature, indicating thepotential impact of business operations and activities on nature. AUO uses the ENCORE database's impact
rating of our production activities as a baseline and then calculates and adjusts the values for each site
based on internal benchmarking of actual pollutants emissions, waste generation and water discharge.
Combining these two axes, the impact matrix forms five potential impact levels (from very low to very high)from the bottom left to the top right.
On the other hand, in the dependency matrix of AUO's manufacturing sites, we evaluate AUO's dependency
on water resources. For the X-axis, we reference the peak water stress level from the WRI's Aqueduct 4.0
model's monthly data, and adjust the values based on historical water supply data from various counties in
Taiwan to derive the water stress values for each site. The Y-axis is also based on the baseline rating fromthe ENCORE database, adjusted using actual water withdrawal data from each site.
The analysis results of these two matrices indicate that, in terms of natural impact, considering thesurrounding nature conditions and our production activities, most of AUO's sites have a medium level ofpotential nature-related impact. Three sites (i.e., Longtan, Longke, and Tainan) are assessed as having ahigh level of potential impact due to the relatively high biodiversity and ecological value in the surrounding
areas. In terms of nature dependency, most of AUO's manufacturing sites are at a high level of dependency,
indicating a high demand for water resources and relatively high water stress at the site locations.

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RISK & IMPACT MANAGEMENTFIGURE 14： IMPACT AND DEPENDENCY MATRIX OF SUPPLY CHAIN

We applied a similar evaluation process to our supply chain, with the primary diﬀerence being theconsolidation of suppliers in the same product category into one group. The state of nature and interface
with nature for each group are weighted based on the proportion of procurement expenditure. In theimpact matrix of AUO's supply chain, the X-axis uses the weighted sum of the suppliers' location
biodiversity indicators. Due to data accessibility considerations, we use the country-level rating provided by
Nature Needs Half in the matrix. The Y-axis continues to use the ENCORE impact rating for these supply
categories. For the dependency matrix, the X-axis also uses data from WRI Aqueduct 4.0, while the Y-axis
uses data from ENCORE.
The analysis results show that, after considering the locations of major suppliers and the features of theirproduction processes for each product category, among AUO's five main supplier categories (i.e.,
computers equipment, electronic components, glass, chemicals, and plastics), chemicals and plastics have ahigh level of potential natural impact. In contrast, computer equipment, electronic components, and glass,which have a higher procurement proportion, have a medium to low level of potential impact. In terms ofdependency, electronic component suppliers, primarily located in very high water stress areas, show a highlevel of dependency on water resources. The other four supply chain categories fall into the medium level ofdependency.

4.5

ASSESS (A)Translating an evaluation of nature-related dependencies and impacts into an assessment of financial risks
and opportunities is currently a challenging area for many organizations, in particular quantitatively
identifying all points of contact with nature and translating biophysical metrics into financial values.
Nonetheless, we have made best eﬀorts to conduct a preliminary exercise in assessing the potential
financial implications of the nature risks and opportunities to AUO, enabled by the TNFD Guidance on the
Identification and Assessment of Nature-related Issues.
According to TNFD, the Assess process is to identify and prioritize the nature-related risks andopportunities to the organization stemming from their identified dependencies and impacts on nature. The
identification of these risks and opportunities requires the adaptation of existing risk management
processes and incorporation into part of the materiality assessment of the corporation to ensure these
new risks are fully integrated.
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AUO CORPORATION TNFD REPORT 2023

RISK & IMPACT MANAGEMENT

The assessment started with identification of nature-related risks and opportunities associated with thefindings of the ‘Evaluate’ phase on the dependencies and impacts of our own operation and value chains on
nature (i.e., the potential impact induced by pollutants on biodiversity, and the dependency on water
resource). The impact and dependency were than mapped with the nature-related physical and transition
risk categories recommended by TNFD by identifying the connections of the particular nature-related
impact/dependency to AUO’s business operation. Potential financial implications on such risk events canthen be identified accordingly. For example, the dependency on water resources of our own operation andthe supply chain makes us prone to be aﬀected by water shortage events that can cause interruptions on
the production. When water shortage occur, AUO would have to seek for costly alternative water supply,
increasing the operating expenses, or to drop production which decrease the revenue.
On the other hand, although the impacts of our operations and value chains in regard to pollutants andbiodiversity are unlikely to pose physical risks to our business, they can aﬀect our sales revenue andcompany valuation if relevant stakeholders urge for products with a lower nature impact. These aretransition risks expected to rise in the nature-positive trends. Other transition risks potentially arising fromthe impact on pollutants and biodiversity include the emerging requirements for nature-related disclosuresand supply chain management, more stringent regulations on nature-related issues and actions that create
positive/negative changes in sentiment towards the company. Finally, we identified a business performance
opportunity from the increase in resource eﬃciency and material circularity of our production process. As
we have clear targets for water use eﬃciency and waste reduction through improved recycling (listed in
Section 5), this can result in cost savings as our demand for water, waste treatment and raw materials
reduce.
The risk and opportunity assessment results are presented in Figure 15 below:
FIGURE 15： AUO’S NATURE-RELATED RISK AND OPPORTUNITIES
Dependencies/Imp

Category &acts

DriverDescription of Risk/Opportunity
Water shortage leads to production

Dependencies on

Physical risk:

Water Resources

Water shortage

interruptions for own operation
Water shortage leads to supply chain
disruptions

Transition
Impact induced bypollutants/ on
biodiversity

Dependencies on
Water Resources& Impact inducedby pollutants/ on
biodiversity

risk/businessperformance

Customers demand products orprocesses with lower nature impact

opportunity:

Market and shareholders demandMarketnature impact

products or processes with lower

Financial
Implication
OpEx ↑
Revenue ↓OpEx ↑
Revenue ↓Revenue ↓↑Valuation ↓↑Business
performance
opportunity:
Resource

Increase resource eﬃciency or theusage of circular materials in production
process

OpEx ↓

eﬃciency

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AUO CORPORATION TNFD REPORT 2023

RISK & IMPACT MANAGEMENT

Dependencies/Imp

Category &acts

DriverImpact induced byTransition risk:

Emerging requirements for nature-

biodiversity

Policymanagement

Impact induced byTransition risk:

pollutants/ onpollutants/ on

Liability

biodiversity

Impact induced bypollutants/ on
biodiversity

Description of Risk/Opportunity

related disclosures or supply chain

Financial
Implication

OpEx ↑

More stringent regulations on naturerelated issues

OpEx ↑

Transition

Actions that create positive/negative

Risk/Businesschanges in sentiment towards the

Performancecompany due to its contributions to/Opportunity:

impacts on biodiversity

Market valuation↑↓

Reputational
CapitalReference: TNFD Nature-related Risk and Opportunity Registers, November 2022

4.6

PREPARE (P)To address the nature-related dependencies, impacts, risks,

FIGURE 16： AR3T FRAMEWORK

and opportunities, AUO has been implementing various
measures within our business operations and taking actions toengage and work together with wider stakeholders. To betterorganize and plan our nature-related measures and actions,
AUO adopts the ‘AR3T’ framework introduced by the Sciencebased Targets Network (SBTN) (Figure 16). Based on the
mitigation and conservation hierarchy, the frameworkprovides a guidance for the company to plan and arrange thenature actions to (1) avoid future impacts, (2) reduce current
impacts,(3)

restore/regenerate

ecosystems,

and

(4)

transform the systems.
Source: Science-based Targets for Nature: Initial Guidance for Business,
September 2020

The actions that AUO has adopted under AR3T Framework is presented in Figure 17 below. To track andmonitor the progress of the mitigation measures AUO has been implementing, a set of quantitative metrics
and targets were established in Section 5. Meanwhile, further details of our broader nature-related actions
are specified in Section 6.

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RISK & IMPACT MANAGEMENTFIGURE 17： AUO’S ACTIONS UNDER AR3T FRAMEWORK

AR3T
Framework

1. AvoidEngagement Partner
Nature topic

Air/water
pollutants

AUO’s Action

Direct op.

Value

Stake

chain

holder• Implementing andimproving pollutant
processing technologiesօ

2. Reduce

Water usage

Waste• Reducing water
consumption of
manufacturing process• Optimizing water recycling
efficiency• Increasing the use ofreclaimed wastewater•

Reducing non-reusable
waste generated fromproduction•

Promoting the usage ofcircular and recycledmaterials in AUO’s
production(industrial)

Waste(recycle)

Waste(plastic)•

Increasing the suppliers ofrecycled materials•

Promoting the Plastic
Neutrality Initiative andcooperate with value chain
partners

օ

օ

օ

օ

օ

օ
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AUO CORPORATION TNFD REPORT 2023

AR3T
Framework

Engagement Partner
Nature topic

3. Restore &Biodiversity

Regenerate

integrity

4. Transform

RISK & IMPACT MANAGEMENT

Awareness

Education

AUO’s Action

Direct op.

Value

Stake

chain

holder• Environmental monitoringround the Longtan site andthe Xiaoli River• Removing invasive plants
along the Xiaoli River
together with local
stakeholders• AUO Green Party –promoting tree planting
and awareness on
deforestation and forest
conservation• AUO Ocean Party –promoting beach cleaning
and awareness on marine
waste
•

օ

օ

օ

օ

օ

օ

AUO GreenArk promoting environmental
education on water
resource to the public andlocal communities

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AUO CORPORATION TNFD REPORT 2023

5.

METRICS AND TARGETS

METRICS AND TARGETS

Having defined its plan to respond to nature-related dependencies, impacts, risks and opportunities, the
TNFD recommends organizations to determine metrics and set targets to trace the implementation of theplan. The aim of the metrics is to measure progress against their actions, policies and plans to respond tonature-related issues. The set of response metrics could be draw from the factors used in the dependency
and impact assessment (the Evaluate phase of LEAP) and the risk and opportunity assessment (the Assess
phase of LEAP).
AUO has set the following targets for 2024 in managing nature-related impacts and dependencies. The
impact-related and dependency-related metrics and targets are illustrated in Figure 18 and Figure 19
below.
FIGURE 18： IMPACT-RELATED METRICS AND TARGETS
Category
Air

Goal

Metrics

Pollutants

1% reduction per year
compared to 2020

Volatile Organic Compounds (VOCs)
emission per year (ton)Water

Complying with government

Pollutants

regulation

Fluoride ions concentration indischarged water (ppm)

Waste

Reducing non-reusable wastefrom production

2024 Target<142.1 tons

<10 ppm

Total volume of non-reusable waste(tons)<8,700 tons

Total volume of non-reusable hazardous
waste (tons)<3,400 tons

Promoting the usage ofUsage of recycled materials on

circular and recycled

specializing products (%)

materials with third-party*Calculated by the weight of raw materials

30%

certificate
Increasing the number ofsuppliers for recycled

Number of suppliers for recycledmaterials

58

materials
Cooperating with certified
suppliers for recycledmaterials

Percentage of certified circular
economy suppliers for recycled materials
(%)

> 90%

20

AUO CORPORATION TNFD REPORT 2023

METRICS AND TARGETS

FIGURE 19： DEPENDENCY-RELATED METRICS AND TARGETS
Category
Water
usage

Goal

Metrics

Reducing water consumptionof manufacturing process

Total water consumption (cubic meterper day, CMD)

< 64,000
CMD

Increasing the use of

Use of reclaimed wastewater (CMD)

reclaimed wastewater in the*AUO has started cooperating with TaichungShuinan water reclamation plant from 2024

14,000CMD

production process2024 Target

Optimizing the water

Production water recycling rate (%)

recycling eﬃciency*Defined as process recycled water/point-of-use(POU) consumption

Maximizing the percentage ofPercentage of water consumption
monitored by the POU water network
system in Taiwan (%)

90%

Percentage of sites obtaining ISO
46001 water eﬃciency management
system certificate in Taiwan (%)

100%

water consumption undersystem monitoring
Expending sites with ISO
46001 certificate

93%

21

AUO CORPORATION TNFD REPORT 2023

6.

FURTHER NATURE-RELATED INITIATIVES AND OPPORTUNITIESFURTHER NATURE-RELATED INITIATIVES ANDOPPORTUNITIESTo further contribute to the goal of net positive impact on biodiversity by 2050, and to cultivate theconcept of managing nature-related risks as a business opportunity in the long run, AUO has additionallycommitted to the following:

6.1

PLASTIC NEUTRALITY INITIATIVE

Research reports highlight plastic pollution as a critical threat to biodiversity. In response, AUO iscommitted to reducing plastic usage and aims to raise industry-wide awareness to plastic issues. We
started the initiative by assessing our plastic use in the production processes as well as oﬃce activities. We
set 2023 as the baseline year and aim for achieving plastic neutrality by 2030. AUO has adopted the ‘3R+1’
strategy (replace, reduce, recycle, and rethink), and formed a cross-functional plastic task force tocoordinate the eﬀorts.
We also promote this initiative to our value chain and announced this plastic neutrality goals at the annual
Supplier CSR Conference. By cutting down on single-use plastics and promoting the use of recycled andreusable plastics in the production processes, AUO collaborates with upstream and downstream partners
to recycle waste plastics into our own products.
FIGURE 20 AUO WORKS WITH OUR VALUE CHAIN TO PROMOTE PLASTIC NEUTRALITYFIGURE 21 AUO ENCOURAGE EMPLOYEES TO JOIN OUT ‘3R+1’ PLASTIC ACTIONS

22

AUO CORPORATION TNFD REPORT 2023

6.2

FURTHER NATURE-RELATED INITIATIVES AND OPPORTUNITIESINVASIVE SPECIES REMOVAL PLAN

AUO values the environment surrounding our sites and has been actively involved in restoring andconserving the surrounding areas with high ecosystem integrity. Our Longtan site serves as a good
example. We have long been paying attention to the water quality and ecology of the Xiaoli River near ourLongtan site. After achieving zero wastewater discharge in 2015, the subsequent monitoring activities
showed an invasion of Mikania micrantha in the area. Mikania micrantha is a plant known for its vigorous
growth which would overtake and kill nearby trees. As such, it is commonly referred to as the ‘green
cancer’ and listed among Taiwan’s top ten invasive plants.
In 2023, AUO launched our ‘5-Year Invasive Species Removal Plan’ for Mikania micrantha. This initiative
aims to collaborate with government agencies, schools, local communities, and environmental conservationgroups. Together, we will focus on removing controlling Mikania micrantha along the 3-kilometer area of
Xiaoli River and aim to reduce its coverage by 30% by 2027.
FIGURE 22 AUO COROPERATES WITH LOCAL COMMUNITIES TO REMOVE 1,311 KG OF INVASIVE
SPECIES ALONG THE XIAOLI RIVER

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AUO CORPORATION TNFD REPORT 2023

6.3

FURTHER NATURE-RELATED INITIATIVES AND OPPORTUNITIESAUO GREEN & OCEAN PARTY

Since 2008, AUO has organized the Green Party initiative, launching tree planting campaigns to mobilize
employees, their families, volunteers, suppliers, and local communities to promote tree planting eﬀorts. Overthe years, AUO has successfully planted over a million trees. Starting in 2020, AUO expanded this action bycollaborating with the Forestry and Nature Conservation Agency, engaging in forest conservation in areas
such as Houlung, Qingshui, and Yujing.
Meanwhile, in response to the marine waste problems, AUO has initiated the Ocean Party beach cleaning
action since 2022. By 2023, we have held six beach cleaning events, removing a cumulative total of 3,797
kilograms of marine waste.

FIGURE 23 AUO’S OCEAN PARTY BEACH CLEANING INITIATIVE TO REMOVE MARINE WASTE

See also: 2023 Ocean Party documentary24

AUO CORPORATION TNFD REPORT 2023

7.

WAY FORWARD

WAY FORWARD

Based on the findings of this TNFD exercise, as well as to strive for adhering to the nature-related policies
and goals of AUO, AUO will continue looking into opportunities in managing nature-related risks andcontributing to nature positive.
Particularly, through the current TNFD exercise, the possible areas that AUO could look into include
deepened subsidiary and value change nature-related risk assessment, as well as site-specific nature
positive measures such as biodiversity enhancement measures at selected sites with higher linkage tonatural habitats.
In addition to understanding the company’s relationship with nature and setting commitments that credibly
contribute to nature positive, AUO will follow the SBTN AR3T Framework to Avoid, Reduce, Restore &Regenerate and Transform in regard to managing its nature-related business impacts and actions towards
nature positive. AUO aims at adhering to the global goal that taking actions that reduce harm to help
collectively reverse nature loss by 2030, while pursuing restorative, regenerative and transformative
actions are critical to achieving full recovery by 2050.

25

APPENDIX A

TNFD GLOSSARY

Term

Definition

Asset tagging

According to TNFD’s LEAP guidance, asset tagging is a method deepen the heatmap method by using
data specific to corporate assets to determine the exposure to dependencies and impacts.

Biodiversity

The variability among living organisms from all sources, including, inter alia, terrestrial, marine and otheraquatic ecosystems and the ecological complexes of which they are part; this includes diversity within
species, between species and of ecosystems.

Dependencies(on nature)

Dependencies are aspects of environmental assets and ecosystem services that a person or an
organization relies on to function. A company’s business model, for example, may be dependent on theecosystem services of water flow, water quality regulation and the regulation of hazards like fires andfloods; provision of suitable habitat for pollinators, who in turn provide a service directly to economies;
and carbon sequestration.

Doublemateriality

Double materiality has two dimensions, namely: impact materiality and financial materiality.

Impacts(on nature)

Changes in the state of nature (quality or quantity), which may result in changes to the capacity ofnature to provide social and economic functions. Impacts can be positive or negative. They can be theresult of an organization’s or another party’s actions and can be direct, indirect or cumulative. A single
impact driver may be associated with multiple impacts.

Liability risk

Liability risks arise directly or indirectly from legal claims. As laws, regulations and case law related to anorganization’s preparedness for nature action evolves, the incident or probability of contingent liabilities
arising from an organization may increase.

Market risk

Changing dynamics in overall markets, including changes in consumer preferences, which arise fromother risk categories as a result of changing physical, regulatory, technological and reputational
conditions and stakeholder dynamics.

Nature-positive

A high-level goal and concept describing a future state of nature (e.g., biodiversity, ecosystem services
and natural capital) that is greater than the current state.

Policy risk

Changes in the policy context due to new (or enforcement of existing) policies associated with creating
positive impacts on nature or mitigating negative impacts on nature.

Priority
locations

Priority locations are locations that are:•Material locations: Locations where an organization has identified material nature-related
dependencies, impacts, risks and opportunities in its direct operations and upstream and downstream
value chain(s); and/or• Sensitive locations: Locations where the assets and/or activities in its direct operations – and, where
possible upstream and downstream value chain(s) – interface with nature in:• Areas important for biodiversity; and/or• Areas of high ecosystem integrity; and/or• Areas of rapid decline in ecosystem integrity; and/or• Areas of high physical water risks; and/or• Areas of importance for ecosystem service provision, including benefits to
Indigenous Peoples, Local Communities, and stakeholders.

Reputationalrisk

Changes in perception concerning an organization’s actual or perceived nature impacts, including at the
local, economic, and societal level. This can result from direct company impacts, industry impacts and/or
impacts of activities upstream and/or downstream in a value chain.

State of nature

The condition and extent of ecosystems, and species population size and extinction risk, including
positive or negative changes.

Technology risk

Substitution of products or services with a reduced impact on nature and/or reduced dependency onnature. For example, the replacement of plastics with biodegradable containers.

AUO Corporation TNFD Report 2023

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