TCFD

TCFD

Climate Change Risk and Opportunity Management Strategy

With the gradual impact of global warming on economic development, climate change has become an important issue faced by the world. While facing the many risks created by climate change, D-Link has referred to the Task Force on Climate-related Financial Disclosures (TCFD) framework published by the international Financial Stability Board in order to understand, focus on and respond to the risks. We have systematically identified the climate risks and opportunities related to D-Link and have compiled related risk management procedures. The ESG Committee is responsible for risk management. The President acts as the convener of the Committee and convenes a risk management meeting every quarter. The risk management operations are reported to the Board of Directors once a year. D-Link pays attention to climate change trends and the direction of international responses. We have included climate change in the company’s material issues related to sustainable development, and implemented management according to the two aspects of “mitigation” and “adaptation”. At the same time, D-Link is also actively identifying risks and building adaptation capabilities. We are further exploring climate change opportunities, accumulating, and deepening R&D capabilities, developing green energy, energy-saving products and solutions, and implementing energy-saving strategies combined with energy management.

Climate Change Risk and Opportunity Identification

D-Link follows the four core elements of TCFD to disclose information related to climate governance, strategies, risk management, and indicators. The internal interdepartmental team assesses and identifies climate change risks and response measures to find potential dangers and possible opportunities. During the climate change risk and opportunity identification meetings, the team members identify short-, medium-, and long-term risks and opportunities according to the TCFD transformational risks, physical risks, and opportunities list, and assesses the response strategies and financial impacts. At the same time, the team must consider the impact on the company’s products and services, supply chain, adaptation and mitigation activities, R&D investments, and business operations. According to the analysis conducted through this identification process, 3 main climate change risks and 3 climate change opportunities were ultimately identified. The team members conducted strategy formulation according to the identified items and stipulated D-Link’s climate change response strategies.

D-Link’s Climate Change Risk Matrix

D-Link’s Climate Change Risk Matrix

Risk Factors

Customer Behavior Changes 

Increased Cost or Shortage of Raw Materials 

Enhance the Monitoring of Existing Products and Services 

Risk Types

Transition risks - Markets 

Transition risks - Markets 

Transition risks - Policies and regulations

Time of Occurrence Evaluation

medium term

medium term

medium term

Impact Scenario

Due to the rising international awareness for sustainability issues, customer preferences and needs have shifted towards low-carbon and low-energy consumption products, which may impact the company’s order volume.

Investments in energy transformation and carbon-reducing activities may require materials with higher specifications. This may lead to increases in raw material and production costs, reducing the company’s product competitiveness and decreasing sales. This would lead to decreased revenue and increased cost. 

In response to climate risks, policies related to domestic/foreign products are continuously updated. If we are unable to respond to the requirements and regulations of various parties in a timely manner, it will cause our products to fail to meet regulations and impact our business. Instabilities in quality and service may cause products to be fined for violating legal regulations and create a negative impression among customers. This would lead to decreased product sales and revenue. 

Risk Impact Assessment

Impact on products or services: 

If products are unable to meet relevant standards, they will not be sold in global markets. In addition to paying carbon taxes and other additional fees, it may cause revenue to decrease and may even lead to fines.

Impact on new developments or investments: 

ODM factories must be required to develop environmentally friendly materials, energy-saving products with better specifications, and low-energy consumption chips using new technologies. The factories may also be required to update their equipment, which would affect product delivery and sales price.

Impact on supply chains and value chains: 

1. The collection of carbon fees may lead to raw material suppliers increasing the price of products. With the long-term transfer of costs, supplier may need to be replaced. 

2. Rising raw material prices and production costs would lead to relatively higher product pricing. Customers will have to pay higher prices to purchase the products.

Impact on products or services: 

1. The frequency and speed of changes to environmental policies in various countries have increased. Products may not be able to meet the requirements of new laws and policies.

2. Inventories that have been manufactured may not be able to meet the regulations due their raw materials or products, leading to the need to recertify raw materials and the inability to supply, or products must be readjusted or are unable to be sold, causing an increase in inventory. 

Financial Impact Assessment

If we are unable to meet market demands immediately, we foresee reduced product sales, which will lead to decreased revenue. Furthermore, if no innovative products are introduced, investors may be less willing to invest, thereby affecting the company’s long-term development and deployment. 

In order to meet the low carbon and low energy consumption requirements, the price of raw materials has increased, which has led to price adjustments throughout the supply chain. This may gradually affect the end price by 20% to 30%. 

1. The acquisition of materials and equipment needed to update products increases operating costs. 

 

2. Incompliance with legal regulations causes decreases in product sales, leading to decreased revenue. 

D-Link Climate Change Opportunity Identification
and Response Strategy

D-Link follows the four core elements of TCFD to disclose infor-mation related to climate governance, strategies, risk manage-ment, and indicators. The internal interdepartmental team as-sesses and identifies climate change risks and response measures to find potential dangers and possible opportun During the climate change risk and opportunity identification meetings, the team members identify short-, medium-, and long-term risks and opportunities according to the TCFD trans-formational risks, physical risks, and opportunities list, and as-sesses the response strategies and financial impacts. At the same time, the team must consider the impact on D-Link’s prod-ucts and services, supply chain, adaptation and mitigation ac-tivities, R&D investments, and business op
According to the analysis conducted through this identification process, 3 main climate change risks and 3 climate change op-portunities were ultimately identified. The team members con-ducted strategy formulation according to the identified items and stipulated D-Link’s climate change response strate

D-Link’s Climate Change Opportunity Matrix

Opportunity Factors

Develop and Increase Low-carbon Products & Service

Invest in Circular Economy

Obtain Low-Carbon Financing or Investment 

Opportunity Types

Products and services

Resource efficiency

Market

Time of Occur-rence Evaluation

medium term

long-term

medium term

Impact Scenario

Following the international trend of carbon reduction, the company is expanding low-carbon, low-power, and green energy products to respond to the shift in consumer preferences, in order to seize market opportunities in advance. Promote increases in market competitiveness of the company, increases in market share, and improvements of revenue and corporate image, bringing positive impacts to the industry.

In response to international environmental protection trends, we are developing recyclable circular economy products to encourage consumers to recycle products. We are working with strategic partners to develop renewable raw materials and establish the benefits of a circular economy. By promoting environmental awareness and reducing electronic waste, we are improving our corporate image and increasing our revenue. 

In response to climate change, financial institutions and investors have higher ESG requirements for the company. If the company has specific measures and results, we can reduce capital costs and increase funding channels. The increase in sustainable performance has also improved the company’s exposure and increased revenue and market value, which has attracted more investment institutions and increased available capital. 

Opportunity Impact Assessment 

Improving product function and performance can reduce the use of physical devices, reduce power usage in data centers, improve heat resistance, and reduce overheating and crashes during operations. Through the network management software developed by the company, we can help customers understand the usage performance and troubleshooting of products, improve customer usage performance, strengthen communications between management and various operating locations, and quickly eliminate abnormal issues.

Maximizing recycling: 

1. The company can inspect and sort replaced information equipment and provide them to disadvantaged groups for use, so that they may obtain more resources. 

 

2. As product functions increase, the software and hardware of products must be replaced and upgraded. Customers are advised to purchase new and low-carbon equipment. When customers are recommended to replace their equipment, the replaced equipment can be donated to local social welfare groups or schools for technical training. 

 

Minimization of waste output: 

During the design and development stage of products, methods of saving energy, fuel, water, paper, and improving transportation capacity must be evaluated. Product materials that comply with the ideas of a circular economy should be developed to reduce waste output. 

Impact on products or services: 

Improve ESG information disclosure quality to respond to financial institution green financing reviews and sustainable investment trends.

Financial Impact Assessment

1. Reduce indirect (operation) cost 

2. The increased demand for products and services leads to increased revenue 

3. Increase revenue by entering emerging markets 

1. Environmentally aware products can improve corporate image, gain more attention and orders from customers, and increase revenue. 

 

2. Simplifying product transportation packaging and reducing accessories can reduce product cost and expenditure, allowing the product price to better meet market expectations. 

Focus on green finance trends while attaining sustainability goals to obtain better loan interest rates. Currently, related financing solutions already exist in the market. For example, loan interest rates can be reduced by 0.02% to 0.05% according to the sustainability goal attainment progress.