Creating Positive Environmental Impact
In 2023, Board of Directors approved the updated Group Environmental Sustainability Policy and Commitments, aiming for the group to achieve carbon neutrality by 2040. The RE100 (renewable energy usage) target is set to be reached by 2040 as well. Additionally,
environmental protection policies, water
resource policies, chemical policies, and biodiversity and no-deforestation policies have
been established to progressively promote
the sustainability actions of Merry . We also
encourage value chain partners to participate
in environmental protection initiatives, thereby
raising awareness and achieving sustainable
development.
01
Utilized 23.11% renewable energy, totaling 6,978 MWh
02
Energy intensity decreased by 6.11%
03
GHG emissions in Scope 1 & 2 decreased by 14.09%
04
Water intake reduced by 17.24%
05
MERRY Shenzhen has completed the TCFD analysis.
Key Goals：2040 carbon neutrality
As a global leader in electroacoustic manufacturing,
Merry actively addresses the environmental and resource issues brought about by climate change.
Merry actively addresses the environmental and resource issues brought about by climate change.
Climate-related Financial Disclosures(TCFD)
The governance level of MERRY acknowledges the potential impact of climate change on its operations and long-term development. Since 2020, it has been implementing climate change-related management mechanisms, progressively expanding the scope of assessments regarding climate-related risks and opportunities each year.
Climate Governance
| Board Oversight | The Board of Directors serves as the ultimate decision-making body for climate change risk management at MERRY, overseeing the approval of relevant risk management policies, monitoring the implementation of climate-related risk management, providing guidance on response strategies, and supervising the outcomes and achievement of goals related to these initiatives. |
| Management responsibilities |
Sustainable Development and Nomination Committee: Chaired by Independent Director Wu Huihuang, with CEO Huang Zhaofeng serving as Chief Sustainability Officer, the committee convenes regular meetings to plan, execute, and review sustainability initiatives. Additionally, it serves as the supervisory body for climate risk and opportunity assessments. Risk Management Team： The department dedicated to risk management at MERRY leads the establishment of cross-departmental working groups to carry out climate change risk identification and response plan implementation. They coordinate the planning of risk and opportunity identification and response plan processes. Company X's climate change risk assessment operations are structured within the ISO 31000 management system framework, integrated with existing risk management operations, and executed annually. Additionally, the Risk Management Team regularly confirms execution outcomes, integrates climate change risk management reports, and reports the results of climate change risk and opportunity assessments to the Board at least once a year, guiding the execution of climate risk and opportunity management. From 2023 to the first quarter of 2024, the Risk Management Team held three meetings to assess climate change risks and opportunities at the Shenzhen plant and proposed response plans for key risks. The outcomes are incorporated into relevant operational promotion plans and regularly reported to the Sustainability Promotion Committee and the Board, serving as governance decision references. Climate Change Working Group: Composed of department heads from various departments, this cross-functional team is responsible for driving climate change risk and opportunity management. It convenes relevant unit colleagues to assess risks and opportunities and plan response strategies. |
Climate Scenario
Although MERRY does not belong to industries with high carbon emissions intensity, the effects of global warming resulting from climate change still impact significant stakeholders of MERRY. To promptly respond to market trends and potential customer demands, MERRY conducts scenario analysis to identify climate change risks and opportunities. The outcomes of this assessment are thoroughly reviewed by business units and functional departments to serve as guidelines for daily operational adjustments. Additionally, regular progress and outcome reports are provided to the Sustainability Development and Nomination Committee and the Board, serving as reference factors for corporate decision-making.
In consideration of these factors, MERRY selects the SSP5-8.5 scenario for physical risk Risk Inventory Financial Impact Assessment of Risks and Opportunities Response Planning and Reporting Key Risk Analysis Identify and list climate-related risks and opportunities relevant to MERRY based on domestic and international regulations and the expectations of external stakeholders. Consider the likelihood of risks/ opportunities occurring and their impact on operations, assess the potential financial impact items and their severity. For key risks and opportunities, considering the severity of financial impacts, evaluate response strategies (mitigation, transfer, acceptance, control) and plan response measures. Report according to internal management processes; disclose regularly in the sustainability report. Execution Method： Invite relevant units to assess and discuss; the Risk Management Team evaluates and confirms the analysis results. Evaluation Dimensions： Timeframes for potential risk occurrence (short-term 1-3 years, medium-term 5-10 years, longterm 10 years or more), likelihood of risk occurrence, locations where risks may occur (direct operations, upstream supply chain, downstream customers), and the impact severity of risks. Evaluation Items： Transformation (policy and regulations, technology, market, reputation) risks, Physical (immediate, long-term) risks. The analysis results are quantitatively ranked, and the top three risks and opportunities are selected as key risks. assessment and the national target scenario for transition risk assessment. Furthermore, it evaluates external information such as policy changes, physical environment, social factors, and technological advancements as the basis for the annual climate change risk assessment.
In consideration of these factors, MERRY selects the SSP5-8.5 scenario for physical risk Risk Inventory Financial Impact Assessment of Risks and Opportunities Response Planning and Reporting Key Risk Analysis Identify and list climate-related risks and opportunities relevant to MERRY based on domestic and international regulations and the expectations of external stakeholders. Consider the likelihood of risks/ opportunities occurring and their impact on operations, assess the potential financial impact items and their severity. For key risks and opportunities, considering the severity of financial impacts, evaluate response strategies (mitigation, transfer, acceptance, control) and plan response measures. Report according to internal management processes; disclose regularly in the sustainability report. Execution Method： Invite relevant units to assess and discuss; the Risk Management Team evaluates and confirms the analysis results. Evaluation Dimensions： Timeframes for potential risk occurrence (short-term 1-3 years, medium-term 5-10 years, longterm 10 years or more), likelihood of risk occurrence, locations where risks may occur (direct operations, upstream supply chain, downstream customers), and the impact severity of risks. Evaluation Items： Transformation (policy and regulations, technology, market, reputation) risks, Physical (immediate, long-term) risks. The analysis results are quantitatively ranked, and the top three risks and opportunities are selected as key risks. assessment and the national target scenario for transition risk assessment. Furthermore, it evaluates external information such as policy changes, physical environment, social factors, and technological advancements as the basis for the annual climate change risk assessment.
Risk Management
According to MERRY’s climate change risk management process, it identifies climate-related risks and opportunities, evaluates response strategy options, and regularly conducts internal and external reporting. Climate-related risk factors have been integrated into Company X's existing risk management mechanisms and are regularly promoted by the Risk Management Team.
| Risk Inventory | Identify and list climate-related risks and opportunities relevant to MERRY based on domestic and international regulations and the expectations of external stakeholders. |
| Key Risk Analysis | Execution Method：Invite relevant units to assess and discuss; the Risk Management Team evaluates and confirms the analysis results. Evaluation Dimensions：Timeframes for potential risk occurrence (short-term 1-3 years, medium-term 5-10 years, longterm 10 years or more), likelihood of risk occurrence, locations where risks may occur (direct operations, upstream supply chain, downstream customers), and the impact severity of risks. Evaluation Items：Transformation (policy and regulations, technology, market, reputation) risks, Physical (immediate, long-term) risks. The analysis results are quantitatively ranked, and the top three risks and opportunities are selected as key risks. |
| Financial Impact Assessment of Risks and Opportunities | Consider the likelihood of risks/ opportunities occurring and their impact on operations, assess the potential financial impact items and their severity |
| Response Planning and Reporting | For key risks and opportunities, considering the severity of financial impacts, evaluate response strategies (mitigation, transfer, acceptance, control) and plan response measures. Report according to internal management processes; disclose regularly in the sustainability report. |
Indicators and Targets
MERRY declares its commitment to achieving carbon neutrality for the Group by 2040, in alignment with international trends and the national goal of net-zero emissions by 2050. In response to this commitment, MERRY identifies climate change risks and opportunities and integrates them with existing sustainability objectives. It sets relevant indicators and targets accordingly.
| Indicator | 2023 Target and Achievement | 2025 Target | 2030 Target | |
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| Governance | Group Risk Management and Continuous Operation Plan |
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| Strategy | Sustainable Product Design Revenue |
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| Strategy | Renewable Energy Usage Ratio (RE100) |
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| Risk Management | Carbon Emission Intensity and Energy Intensity (Base Year 2020) |
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Climate Risks and Opportunities
Based on the choice of climate scenarios and the mechanisms of risk management, MERRY systematically promotes climate risk and opportunity assessments annually. This process involves considering political regulations, economic activities, physical environment, social factors, and technological aspects, evaluating both transitional and physical risks as recommended by the TCFD framework. Additionally, MERRY assesses the impact of relevant risk factors across its value chain. In 2023, MERRY expanded its assessment scope to include the Shenzhen factory, enhancing the intensity and breadth of climate risk management. Significant physical and transitional risks are summarized in the table below. Starting from the second quarter of 2024, MERRY plans to delve deeper into quantifying the potential financial impacts of these risks, establishing mechanisms for cost or revenue estimations. The quantified results will be reported to the Sustainability and Nomination Committee.
Taiwan HQ
MERRY Senzhen
| Significant Risk Factors | Timeframe | Sphere of Impact | Potential Financial Impacts | Response Strategies and Plans | Corresponding Opportunities | Strategies for Mitigating Financial Impacts and Realizing Opportunities | |
|---|---|---|---|---|---|---|---|
| Physical Risk | Short-Term Physical：Extreme Weather Disrupting Operations or Employee Transportation | Short Term (1-3 years) | Direct Operations | Increased Capital Expenditure, Higher Asset Losses | Enhance Internal Emergency Response Capability Regularly Assess Asset Placement Utilize Insurance to Mitigate Property Losses |
Resource Efficiency： Employing more efficient production and distribution processes. | Introducing automated production systems to enhance product efficiency and reduce on-site manpower requirements. Incorporating supply chain disruption considerations due to climate change into production and sales planning. Lowering direct costs, reducing indirect costs. |
| 實體風險 | Short-Term Physical：Disruption in Supply Chain Transportation due to Extreme Weather | Short Term (1-3 years) | Upstream Suppliers | Increased Indirect Operational Costs | Continuously Enhance Supplier Management, Utilize Business Insurance to Mitigate Losses | ||
| Physical Risk | Short-Term Physical:：Extreme weather leading to production disruptions. | Short Term (1-3 years) | Direct Operations | Increased capital costs. | Continuously promote ESG-related initiatives, obtain preferential sustainable-linked loans to alleviate the pressure of increased capital costs. | ||
| Transition Risk | Technology：Failure in sustainable material development and application. | Short Term (1-3 years) | Direct Operations | Loss of capital investment, revenue decline due to decreased demand. | Develop partnerships with academia and industry. Continue investing in green material research and development. Seek collaboration with suppliers. |
Product and service： Research and innovation in developing new products and services. |
Utilize environmental/sustainable materials to enhance product competitiveness. Continue promoting low-carbon design and utilize better, lighter, and lower-carbon materials. Continuously develop products in line with customer demand, convey information about low-carbon products from MERRY, and seek strategic partnership opportunities. Increase revenue due to increased demand for products and services.
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| Transition Risk | Market：Consumers opt for lower-carbon goods or services. | Short Term (1-3 years) | Direct Operations | Revenue decreases due to declining demand | Monitor international low-carbon trends, industry dynamics, and customer expectations regularly, with relevant findings reported internally. | Market： Entry into new markets |
Continuously promote the development of proprietary brands and expand application areas. Low-carbon designs resulting in light, thin, short, and small products can enable the company to enter existing markets. Increased demand for products and services leads to increased revenue.
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| Transition Risk | Market：Increased cost of acquiring low-carbon raw materials | Short Term (1-3 years) | Direct Operations | Direct cost in - crease | Continuously deepen supplier management. Continuous investment in process research and development. | Market： Patent layout |
Actively utilize internal patent proposal mechanisms to assist in patent acquisition. Continuously promote the protection of trade secrets to prevent leakage of decarbonization technologies and processes.
Reduce indirect costs and increase revenue due to increased demand for products and services. |
| Significant Risk Factors | Timeframe | Sphere of Impact | Potential Financial Impacts | Response Strategies and Plans | Corresponding Opportunities | Strategies for Mitigating Financial Impacts and Realizing Opportunities | |
|---|---|---|---|---|---|---|---|
| Physical Risk | Short-Term Physical:：Disruption to own operations due to extreme weather events. | Short Term (1-3 years) | Direct Operations | A decrease in production capacity leads to a reduction in revenue. | Continuously strengthen daily disaster preparedness and insurance planning. Implement flexible production scheduling mechanisms to enhance emergency response capabilities. |
Resilience：Sustainable supply chain management, adoption of renewable energy, monitoring carbon trading markets.
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Short-term: Promote sustainable supply chain management to reduce raw material supply risks and continue developing alternative materials.
Medium-term: Gradually increase the proportion of renewable energy use to reduce risks associated with policy regulations (such as power restrictions); this may also potentially reduce production costs (such as electricity bills) in the future. Long-term: Continuously monitor the carbon trading market and participate in carbon quota trading as appropriate. Reduce indirect costs. Reduce Indirect Costs |
| Physical Risk | Short-Term Physical：Disruption to supply chain transportation due to extreme weather events. | Short Term (1-3 years) | Direct Operations, Upstream Suppliers | Decreased revenue due to reduced production capacity | Continuously deepen supply chain management to avoid reliance on a single supplier. Continuously diversify production facilities to prevent a single operational location from being affected. | ||
| Transition Risk | Market：Increased stringency of customer demands on products or processes. | Short Term (1-3 years) | Direct Operations | A decrease in demand for products or services leads to a reduction in revenue. | Promoting green production involves planning the implementation of relevant equipment and tools. | Products and Services：Developing and/or increasing low-carbon goods and services. |
Short-term: Continuously develop low-carbon designs, utilizing materials that are lighter, require less, and are recyclable for product design.
Medium to Long-term: Evaluate the promotion of new markets, such as the automotive market. Increasing demand for products and services resulting in increased revenue |
