Building a Climate-Resilient Semiconductor Value Chain: Key Takeaways from SEMICON SEA 2024 Sustainability Forum

Philippines, June 4, 2024 — The semiconductor industry is at the forefront of technological advancement, underpinning critical innovations in artificial intelligence, 5G networks, and quantum computing. However, the sector faces significant climate-related risks that threaten its stability and growth. Addressing these risks through robust climate disclosures and resilience strategies is imperative for long-term sustainability.

In an era where technology is rapidly advancing, the semiconductor industry stands as a cornerstone of modern innovation. From enabling breakthroughs in artificial intelligence and 5G networks to pushing the boundaries of quantum computing, semiconductors are integral to our digital world. Yet, as the industry races towards projected sales exceeding $1 trillion by the decade’s end, it faces a formidable challenge: climate-related risks. These risks not only threaten the industry’s stability but also its potential for future growth. To secure a sustainable future, the semiconductor sector must embrace comprehensive climate disclosures and resilience strategies.

Climate Risk as Business Risk

Semiconductors are essential to our digital infrastructure and national security. However, the complex global supply chain that produces these vital components is highly vulnerable to climate-related disruptions. The World Economic Forum’s Global Risks Report 2023 highlights climate-related risks as some of the most severe global threats, emphasizing the urgent need for businesses to adapt and mitigate these risks. With supply chains often crossing over 70 international borders, any disruption can have far-reaching consequences, underscoring the need for a resilient and adaptable approach to climate risk management.

Maturity of Climate Disclosures

A baseline assessment of climate disclosures within the semiconductor sector reveals that the industry is currently in the ‘Established’ phase of disclosure maturity. The study, utilizing the Nasdaq Sustainable Lens, evaluated 100 leading semiconductor companies’ alignment with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. It is promising to see that fabless companies and certain segments are leading in TCFD disclosures. However, equipment manufacturers lag behind, particularly in areas such as quantitative climate scenario analysis and long-term net-zero commitments. This disparity highlights the need for industry-wide improvement in climate disclosures.

Corporate Climate Reporting and Resilience

Corporate climate reporting varies significantly across the semiconductor value chain. Fabless companies and integrated circuit designers exhibit the highest levels of disclosure, while segments like chemicals and materials, fabs, and direct manufacturers show progress but still require significant improvement. The most challenging aspect remains addressing organizational resilience to climate change. Few companies conduct comprehensive climate scenario analyses or quantify the impacts of climate change on their operations and financial planning. Enhancing these practices is crucial for building a robust, climate-resilient value chain.

Path to Net Zero

While 75% of assessed companies have set near-term greenhouse gas (GHG) reduction targets, there is a noticeable gap in long-term net-zero commitments. Achieving a 1.5°C aligned low-carbon transition necessitates more ambitious long-term goals. Short-term targets are essential stepping stones, but they must be complemented by concrete, long-term strategies to ensure sustained progress. Ensuring climate resilience in the semiconductor value chain is not only a sustainability concern but a business imperative, crucial for supporting ongoing technological innovation and maintaining economic stability.

The path to climate resilience for the semiconductor industry is clear: improve the maturity of climate disclosures and develop comprehensive strategies to manage climate risks. As the sector navigates these challenges, robust climate reporting and proactive resilience planning will be key to sustaining growth and innovation in a rapidly evolving technological landscape. By embracing best practices and aligning with frameworks like the TCFD, semiconductor companies can better prepare for and mitigate the impacts of climate change, ensuring a resilient and sustainable future for the industry.

Rebound Electronics Ltd is fully committed to environmental stewardship, ensuring compliance with legal requirements, integrating sustainable practices into all aspects of operations, setting environmental objectives, considering global impacts, continuously improving environmental management systems, and fostering employee accountability and understanding, all in alignment with ISO 9001:2015 and ISO 14001:2015 standards, with leadership from the CEO and management team.

Senior Commercial Analyst

JENNY ORTILLA