Innolux and AUO Should Follow Apple and Sony

Politicians pass laws. Activists raise awareness. But in the end, companies like Innolux, AUO, Apple and Sony decide what to make and how to make it. Those decisions deeply influence economies and industries. But they also affect the environment and the climate in fundamental ways.

This is no less true in the manufacturing of a class of goods that’s so indispensable in the 21st century: electronics.

By one account, the electronics industry was responsible for 4% of global greenhouse gas (GHG) emissions in 2022. It’s doubly true in the technological epicentre that supplies much of the world with key electronics components: Taiwan.

Some global electronics brands, such as Apple and Sony, have taken the reins of decarbonisation. They are proactively curbing greenhouse gas emissions, both from their operations and energy use. Much more importantly, they’ve also committed to reducing emissions from their supply chains.

Others, including the Taiwanese electronics components makers Innolux and AUO, have found themselves in the passenger seat on the path to decarbonisation.

How exactly do these two sets of companies compare? What can climate laggards like Innolux and AUO learn from leaders like Apple and Sony?

Apple: Renewable Energy Leader

As one of the most recognisable global brands in modern history, Apple scarcely needs an introduction. Although Apple doesn’t directly own manufacturing facilities, it works with hundreds of suppliers that collectively operate over 600 production facilities worldwide. With a market capitalisation of over USD 3 trillion, Apple ranks among the top three tech companies in the world.

Apple’s Sustainability Track Record

Apple’s climate track record is head and shoulders above other leading consumer electronics and tech companies. The clearest indication came from a report published by the nonprofit Stand.earth that compared climate initiatives by six tech giants — Apple, Dell, Google, HP, Microsoft and Nvidia. It found that Apple is the only company among the six that has set targets for its suppliers to switch to renewable energy and become carbon neutral.

This is significant because electricity — both for making Apple products and for charging them — accounts for the largest portion of Apple’s total carbon emissions.

Responding to Apple’s clarion call, over 320 suppliers — representing 95% of Apple’s direct manufacturing spend — have committed to using clean energy for their Apple production by 2030. This has resulted in more than 16 gigawatts (GW) of new renewable energy capacity powering Apple’s global operations today, a threefold increase from 2020. This generated over 25.5 million megawatt-hours of clean energy across the supply chain last year, avoiding over 18.5 million tonnes of carbon emissions. These efforts have helped Apple reduce its overall greenhouse gas emissions by more than half since 2015.

Apple’s Renewable Energy Targets

Apple’s proactive efforts to decarbonise its supply chain are driven by its ambitious climate target. In what it calls Apple 2030, the company set a goal to be carbon neutral across its entire value chain by the end of this decade.

Apple is also committing to reducing the emissions from its downstream value chain – affecting consumers who use Apple products every day. To this end, Apple has pledged to match every watt of electricity that customers use to charge its products with clean electricity by 2030, including by making large investments in new renewable projects in markets around the world.

Sony

Although not in the same league as Apple, Microsoft or Google, Sony is one of the world’s largest and most recognisable consumer electronics and media companies. Established in 1946, Sony is best known for its many consumer electronics devices such as TVs, laptops and gaming consoles. It will also be expanding into semiconductors, sensors and logic chips to edge into AI, decarbonisation and electric vehicles. As of 2023, Sony owned facilities in Japan, the US, the UK, Thailand and Malaysia and boasts a large supplier network globally.

Sony’s Sustainability Track record

Although not as ambitious as Apple, Sony’s recent climate track record is commendable. In 2018, Sony joined RE100, a global association of corporations with targets to switch to 100% renewables. The share of renewable energy in its total electricity consumption has increased from 6.6% in 2020 to 29.7% in 2022. This has resulted in a drop in GHG emissions from Sony-operated sites globally by 12.5% compared to 2020. 

Sony’s Renewable Energy Targets

Sony has pursued environmental initiatives since the 1970s, but 2010 was the pivotal year for its climate actions. That year, Sony published “Road to Zero,” its long-term environmental plan to achieve zero environmental footprint throughout its operations and the lifecycle of its products by 2050.

But in 2022, Sony ramped up its ambition. It announced that it’s accelerating its carbon neutrality goal across all of its divisions, with 2030 as the new target year. This includes using 100% renewable energy in Sony’s own sites by 2030 and, along the way, 35% renewables by 2025. It’s now also aiming to make its entire value chain carbon neutral by 2040 instead of 2050.

AUO: Too Little, Too Late

Formed after a 2001 merger between Acer Display Technologies and Unipac Optoelectronics, AUO is a Taiwanese manufacturer of display panels and crystal silicon wafers for semiconductors. Its products are used in sectors as wide-ranging as retail, transportation, manufacturing, health care, education and solar panels.

Although it’s far from a household name, AUO’s operations are sizeable. The company generated a revenue of NTD 246.8 billion (USD 7.6 billion) in 2022. It runs manufacturing sites in mainland China and Slovakia. It also had a facility in Singapore that closed recently.

AUO’s Sustainability Track Record

Compared to climate leaders like Apple and Sony, the absence of significant concrete actions in AUO’s sustainability track record becomes glaring.

It is true that AUO is a member of many sustainability and climate-oriented associations. This includes global organisations like the Science Based Targets initiative, the Taskforce on Climate-related Financial Disclosures, as well as Taiwan-specific initiatives like the Taiwan Alliance for Net-Zero Emissions (TANZE) and Taiwan Climate Partnership (in fact, AUO is among the founding companies). To its credit, AUO became an official member of RE100 in 2022.

But AUO only recently joined many of these initiatives, and its climate actions so far have been underwhelming. Take AUO’s renewable energy use for example. The share of renewables in AUO’s total electricity consumption in 2022 was a meagre 1.16%. Its goal of renewables use for 2023, declared in 2022, was 8% — a significant jump from the previous year but still lacking in ambition.

AUO’s Renewable Energy Targets

AUO’s renewable energy targets pale in comparison to Apple’s and Sony’s. For 2030, AUO is targeting an increase in the share of renewables to 30% of its total electricity consumption. Only in 2050 does it intend to use 100% renewables.

A similar picture emerges with respect to emissions reductions. AUO is aiming to achieve net-zero emissions only from its offices by 2030, ignoring the carbon footprint of its manufacturing operations. To its credit, AUO has issued a supplier carbon reduction target of 20% by 2030, but even this is unambitious when examined side-by-side with Apple and Sony.

Nonprofit Greenpeace has analysed the impact of 12 East Asian electronics companies’ renewable energy targets on their business competitiveness. Greenpeace has found that although AUO has set a target of 100% renewable energy by 2050, it would save USD 273.69 if it goes through with its transition by 2030.

Innolux Corporation: Lacklustre Action and Targets

Founded in 2003, Innolux Corporation’s profile is rather similar to AUO’s. In 2010, it merged with Chi Mei Optoelectronics and Toppoly Optoelectronics. The company is Taiwan’s leading display panel manufacturer and the world’s third-largest flat panel maker after South Korea’s Samsung and LG. Its liquid crystal displays are used in TV panels, desktop monitors and laptop panels, medical and automotive panels, and other applications. Its 41,000 employees work across 14 manufacturing plants.

Innolux’s Sustainability Track Record

Innolux’s ESG Report boasts a lengthy list of awards it has received over the years for its sustainability-related achievements. But these are generally for things like planting trees in their industrial park and water conservation. Commendable, but hardly making a dent in its GHG emissions.

Like AUO, Innolux participates in a number of net-zero initiatives, including the TANZE and Taiwan Climate Partnership, a coalition of eight major Taiwanese tech companies aiming to align their supply chains with global CO2 reduction trends. This has prompted Innolux to investigate how much renewable energy its suppliers are using. Data from its suppliers showed that 23 suppliers (20%) are using renewable energy, but it is unclear what the specific energy use and mixes are of those 23 suppliers.

To its credit, Innolux reports that it reduced its Scope 1 and 2 GHG emissions by 19.3% between 2020 and 2022. But this emissions cut is attributable more to enhanced efficiency in the company’s operations than to its renewable energy use. In fact, Innolux has the lowest current renewable energy use among all of the companies compared here — with 0.4% of overall electricity consumption in 2022. 

Innolux’s Renewable Energy Targets

The company’s relatively lagging renewable energy use is emblematic of Innolux’s lacklustre climate ambitions. Innolux is yet to issue a 100% renewable energy target. While it has committed to shifting completely to renewables for all of its office locations by 2030, the company’s renewable energy targets for its manufacturing plants stop at 20% of total energy use by 2030. Given that its manufacturing accounts for a far larger share of total energy use than its offices, this target is underwhelming.

Innolux’s reluctant renewable energy target will likely damage its bottom line. Greenpeace has estimated that if the company commits to 100% renewables by 2030 it could save USD 294.93.

Compared to Apple and Sony, Innolux’s climate target for its supply chain is equally unambitious: a 20% reduction in emissions from key suppliers by 2030, compared to 2020. According to Innolux’s ESG Report, “key suppliers” refers to 32 out of the company’s 126 suppliers. In other words, its supply chain target only addresses a small slice of its total Scope 3 emissions.

Learning From Climate Leaders

Corporate action on climate and renewable energy is immensely important for moving the needle on decarbonisation. This is particularly true for the electronics industry, whose supply chain spans the entire globe.

Yet, there is a wide spectrum of commitments when it comes to electronics companies’ climate and renewables targets. The Taiwanese electronics components manufacturers AUO and Innolux are relative laggards compared to leaders like Apple and Sony.

AUO and Innolux have an opportunity to join their US and Japanese counterparts by taking several actions. The first is to set targets to use 100% renewable energy in their direct operations by 2030. Second and more ambitiously, the companies should request that their suppliers also commit to 100% renewable energy by 2030. Third, to aid both of these commitments and to facilitate the growth of global renewable energy generation capacity, these electronics companies should allocate a part of their annual spending to renewable project development, either in their own market or where their suppliers are located. With these actions, AUO and Innolux will be considered among the growing circle of climate leaders.