Brand CasesFoxconn Supply Chain Carbon Neutral Initiative

Publication Date:2022-08-09
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Energy conservation and emission reduction has become an important concern topic for global enterprise. As a leader in technology manufacturing industry, Chairman Liu Yangwei of Foxconn Technology Group defined the strategic direction of "sustainable operation = EPS + ESG", focusing on "Integrity Management, Innovation and Service, Responsible Supply Chain, Green Manufacturing, Friendly Workplace", taking energy conservation, emission reduction, greening and recycling as Foxconn energy policy. In compliance with this policy, Foxconn commits to achieve net zero emissions in the entire value chain by 2050, actively responds to the CA100+ climate action and promotes the sustainable development by participating in internationally renowned ESG rating and IPE CATI ranking to realize the responsibility of protecting the environment and the earth. In order to effectively implement the policy and accept the supervision of the relevant parties, Foxconn will disclose its energy conservation and emission reduction targets to the outside world through official website for transparent management.

Figure 1: Foxconn ESG Long-Range Targets

In order to make suppliers clearly understand how to achieve comprehensive carbon neutrality, Foxconn formulated a carbon neutral development path and promoted it through key supplier conferences. The suppliers have a deep understanding of the need to give priority to promoting energy-saving transformation of high-energy-consuming equipment to reduce power consumption and improve energy efficiency, but also need to simultaneously promote suppliers to use renewable energy to effectively reduce carbon emissions.

 

Figure 2: Carbon Neutral Pathway

To better achieve supply chain carbon reduction and promote excellent energy conservation and emission reduction cases to suppliers, Foxconn identifies pilot suppliers through Commodity procurement recommendations and carbon reduction basic information surveys. The expert team will go deep into the supplier's site to conduct energy-saving renovation counseling, provide partners with customized energy-saving solution suggestions, and work together to achieve carbon reduction goals.

 

Figure 3: Timeline for supplier carbon reduction projects

Foxconn has been promoting the transformation in public institutions and sharing experience internally, which has achieved good results. Therefore, Foxconn expert team chooses projects with good energy efficiency to promote in the supply chain. The main projects are as follows:

1. Central air conditioning energy-saving renovation

2. Air compressor energy-saving renovation

3. Important energy-consuming equipment (such as stamping machines) energy-saving renovation

4. Rooftop Photovoltaic Solar Project

Foxconn and its partners are a community of interests. Foxconn closely follows the step of brand customers and works with suppliers to achieve carbon neutrality. In order to better motivate suppliers to do energy saving and carbon reduction, the carbon neutrality evaluation of key suppliers has been launched. The key indicators include supplier carbon neutrality, long-term carbon reduction target setting, ISO14064/ISO 50001 certification, commitment to renewable energy, investment in photovoltaic solar energy projects and upstream supplier management, etc. The supplier results will be incorporated into supplier performance management every year, and procurement measures either increase or decrease order will be taken per final rating to promote suppliers to maintain their performance. Carbon neutrality evaluation can effectively promote suppliers to meet Foxconn's Scope 3 targets, such as requiring suppliers to sign a renewable energy commitment letter and commit to use 100% renewable energy to produce Foxconn products. According to the analysis of carbon emission data in the electronics industry, most of the suppliers' carbon emissions are generated by outsourcing electricity, so renewable energy is a very effective way to reduce carbon emissions, which is also adopted by major well-known brands.

 

Figure 4: Foxconn Supplier Carbon Neutrality Evaluation System

Since 2012, Foxconn began to use the system to manage the carbon of suppliers, including suppliers accounting for 80% of the purchase amount. At the same time, according to policy requirements, set emission reduction targets for each manufacturer in the carbon management system every year, and promotes them to achieve their goals through performance evaluation, on-site audit and system follow-up. Foxconn discloses its suppliers' carbon reduction achievements through CSR annual reports, official website, news and other channels every year to meet the expectations of stakeholders.

 

Figure 5: Trend chart of Foxconn supplier carbon emissions 

On the basis of carbon neutrality policies of various countries, the proportion of clean energy in the national energy structure will be higher and higher in the future, which means that the installed capacity of traditional coal power generation will be lower and lower. According to the statistics of Energy Watch Group, by 2050, The world will realize 100% clean energy power supply, among which solar power stations will account for 69%. Solar Power Station will be a development trend based on both environmental and economic benefits. Foxconn will cooperate with end brand customers to promote suppliers to use or purchase clean energy according to the national clean energy promotion policy. When building rooftop photovoltaic solar power stations, suppliers should focus on the roof area, investment mode and return period.

Figure 6: Investment Description of Rooftop Photovoltaic Solar 

China carbon peak and carbon neutral policy will cause the energy structure adjustment, the future electricity market will give priority to clean energy and the greening of the industrial chain will be the development trend. Foxconn will continue to make efforts in clean energy fields, at the same time promote supplier use of clean energy, reducing carbon emissions to achieve carbon neutrality by 2050.

Figure 7: The forecast trend of China energy structure adjustment

(The above content is provided by the brand, and the authenticity of the data is the responsibility of the brand)

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