The TCFD Report marks the first time that TSMC uses a systemic disclosure framework to demonstrate TSMC's efforts in addressing the climate change and the Company’s progress.

TSMC Publishes Its First TCFD Report, Committing to Reach Net Zero Emissions to Address Climate Change

D.W. Sun
Jack Wen
M.L. Lo
Phoebe Hsiao

Adapting to climate change is key to a sustainable business. TSMC is committed to reach net zero emissions by 2050 and published its first Task Force on Climate-related Financial Disclosures (TCFD) Report in September 2021. TSMC drives low-carbon transformation and adaption to climate change through four approaches from governance, strategies, risk management, to metrics and targets, and further contributes to the development of a green semiconductor industry ecosystem to mitigate climate impact and protect our shared global environment.

As a responsible corporate citizen, TSMC strives to adapt to climate change and mitigate climate impact to protect our shared global environment. We develop strategies and targets to ensure sound execution and build a sustainable culture. We also look forward to collaborating with others to build an enduring planet.

- Dr. Mark Liu, Chairman of TSMC and Chairman of the Company’s ESG Steering Committee

TSMC's Climate Change Governance Overview

Sustainable Climate Management by Board of Directors

TSMC's climate change governance and management framework are under the direct supervision of the Board of Directors, while the ESG Steering Committee is responsible for establishing the Company's mid- to long-term climate change management strategies. The ESG Committee integrates the inter-organizational resources and tracks the progress on climate actions. The Energy Saving and Carbon Emission Reduction Committee develops climate change adaptation and mitigation management plans. Meanwhile, the Risk Management Organization briefs the Audit Committee each year on the ever-changing risk environment and the appropriate mitigation efforts have been taken.

Comprehensive Scenarios and Strategies

TSMC follows the TCFD framework and identifies climate risks and opportunities, considering the top three risks of "net zero emission trends, as well as impact of droughts on TSMC operations and company reputation" to quantify financial impacts. To do so, the Company references disclosure methodologies used by international and domestic companies, while taking into account internal and external environmental changes. TSMC addresses the risks by the four main management strategies of mitigation, low carbon products and services, supply chain carbon reduction, and adaptation, with the goal of reducing the operational and financial impacts of climate change and enhancing the Company’s climate resilience.

Following the TCFD framework, TSMC analyzes and assesses the impact of GHG on TSMC operations or supply chains resulting from the worst-case scenario for transition risks and physical risks. The results will then be included into the Company's strategy resilience assessment to minimize the impact and achieve zero interruption to production.

Fully Integrated Risk Management

TSMC operates an enterprise risk management (ERM) program to integrate and manage potential sustainability risks including strategic, operational, financial, and that represent potential negative consequences to operations and financial results. Through the ERM mechanism, the Risk Management Executive Council adopts a risk map for assessing the likelihood and impact of major climate change risk events on operations, and defines the risk level and prioritization of risk controls as well as implementing risk management strategies that corresponds to the risk levels.

Industry-leading Metrics and Targets

TSMC has continued to implement benchmark practices for optimizing the use of process greenhouse gases, minimizing global warming potential (GWP), and maximizing the removal rate in exhaust. In addition, TSMC has also adopted the best available technology on a large scale. At the same time, TSMC will perform long-term tracking for the mid- and long-term targets for the and various performance indicators, which will be factored into the compensation structure for senior executives. The approach will help TSMC to attract and retain senior executives and to strengthen the implementation of TSMC's ESG strategies.

Adapting to climate change, TSMC fulfils its commitment as a responsible corporate citizen and establishes partnerships with multiple stakeholders to implement short, medium and long-term climate transition action plans and achieve a zero-carbon future.

- Lora Ho, Senior Vice President and ESG Committee Chairperson at TSMC

The TCFD Report marks the first time that TSMC uses a systemic disclosure framework to demonstrate TSMC's efforts in addressing the climate change and the Company’s progress. The objective is to strengthen business contingency management capabilities and strive towards sustainable growth. For more details about TSMC's action on climate change, please refer to TSMC TCFD Report and TSMC ESG website.