Promoting a green and low-carbon supply chain is essential for TSMC to achieve its net-zero emissions goal. In addition to incorporating carbon reduction performance as a criterion for selecting suppliers, TSMC has established a supply chain carbon reduction action guide to enhance the sustainable operations of its suppliers. In 2024, specifically targeting tier one raw material suppliers with facilities in Taiwan, TSMC launched a carbon reduction subsidy project for the first time, offering a total of NT$84 million in subsidies. This financial support encouraged suppliers to update, replace, or install new equipment to reduce emissions. In 2024, 26 suppliers passed the proposal evaluation, driving a total carbon reduction investment of NT$5.5 billion and reducing carbon emissions by 450,000 MT CO₂e, equivalent to the annual carbon sequestration capacity of approximately 45,000 hectares of forest. TSMC plans to initiate the application process for the subsidies in February 2025, continuing to drive the green transformation of the supply chain. 

Selection Based on Three Key Criteria to Ensure Successful Implementation and Benefits

Carbon emissions from supply chain operations are a critical concern for TSMC. According to a survey of suppliers' factories approximately half of the carbon emissions from TSMC's tier-one raw material suppliers originate from their factories' direct emissions (Scope 1) and indirect emissions related to energy (Scope 2). Therefore, the carbon reduction subsidy program prioritizes suppliers with legally registered factories in Taiwan that are committed to investing in energy-saving and/or carbon-reduction equipment. These suppliers are encouraged to submit carbon reduction proposals. TSMC, together with external experts, evaluates these proposals based on three key criteria: effectiveness, execution capability, and innovation and replicability. Once a proposal is approved and implemented, TSMC collaborates with third-party audit organizations to visit the suppliers' factories to monitor progress and conduct mid-term and final outcome reviews, ensuring that the actions are completed on schedule. 

Evaluation for the 2024 Supply Chain Carbon Reduction Subsidy Project

To enhance supplier participation and foster innovation, TSMC's supply chain carbon reduction subsidy program will, starting in 2025, increase the subsidy ratio for proposals involving innovative or emerging technologies, such as carbon capture. TSMC will also take into account supplier size and carbon reduction capabilities as part of the evaluation criteria. By establishing varied minimum threshold for project carbon reduction requirement, TSMC aims to encourage more suppliers to join the initiative, thereby strengthening the foundation for supply chain decarbonization and working together to fulfill the net-zero emissions commitment.