Sustainable Innovation

ASUS adhere to our philosophy to provide valuable contributions to humanity. Beginning with the product life cycle, ASUS drives the whole value chain to practice corporate social responsibility. ASUS further extends the core spirit of sustainable management to social care, and continues to create sustainable competitiveness through innovative thinking. In 2018, ASUS’ sustainability management approaches moved towards the new milestone: the sustainable integration model of “digitizing data, adopting scientific management.” Shared value has been created in the spirit of “Wiser Together.”

The sustainability unit leverages the internal and external resources to expand and integrate the inputs and outputs of “Six Main Capital”: finance, manufacturing, intelligence, human resources, environment, and society capitals from a single direction of traditional financial capital. We also assess the overall impact of ASUS’ corporate operation and the product value chain on the economy, environment, and society. ASUS carry out our corporate’s sustainable value management model based on the Triple Bottom Line (TBL). Internally, the management model is used as the cornerstone of the organization to promote sustainable integration decision making and key performance indicator management so that the corporate value creation can be maximized. Externally, the model refers to the international Integrated Reporting (IR) framework from the International Integrated Reporting Council (IIRC); it demonstrates the sustainability impact created by ASUS using monetized value and shows the results to stakeholders.

In 2018, we launched several sustainability projects, including Circularity Fact Program, ASUSCare Cloud Healthcare, Task Force on Climate-related Financial Disclosures (TCFD), Environmental Profit and Loss (EP&L) Program, and Sustainable Value Creation, in response to our 2020 Sustainability Goals, material topics, and SDGs.

 

Circularity Fact Program

In the past, most industries employed the linear economic model, "take, make, and discard." This process and consumption behavior continuously consumed global resources, as well as created serious environmental problems, such as worsened ecological environments, climate change, and mass waste production. ASUS understands that the linear business.

“Wastes are misplaced resources.”

We need to rethink the way we consume resources, and expect to extending the product lifecycle from “cradle to grave” to “cradle to cradle” by providing another new life for the product. According to the concept of a circular economy, when a product loses its original function, that is not the end of it; instead, it is the start of another purpose. There will be a new cycle of “resource, product, recycled resource” that will produce very little waste for the whole system. This cycle will solve the conflict between economic development and environmental impact. The establishment of a circular economy cannot be achieved at a glance, but gradually. With systematic thinking, we review each phase of the lifecycle and start with eco-friendly designs. Through a proper recycling processing system, we will move toward the goal of zero pollution and zero waste, and open up new business opportunities. Details are described in chapter 2 Environmental Responsibility.

In addition to product environmental design, ASUS also gradually moves towards a circular economy through projects every year.

In 2016, ASUS became the first consumer IT headquarters in the world to receive the Zero Waste to Landfill validation. To an enterprise, proper waste management is not only part of its social responsibility. Through waste management and resources recycling and reuse, we can not only decrease the cost of waste processing, but also increase our business competitiveness, as well as improve the value chain to achieve industrial transformation, creating working opportunities and developing a new business model. The major sources of ASUS wastes are mainly R&D materials, waste products, packaging materials, and domestic waste. With strict categorization and management mechanisms, we ensure that the environmental impact of waste can be minimized throughout the process of storage, transportation, recycling, and eventual incineration and landfill. Additionally, through the increase in the recycling and reuse rate, we can minimize the waste that enters the incineration or landfill process.

Polylactic Acid (PLA) Innovation and Remanufacture Program

Through the Zero Waste to Landfill project, we found that the recycling practice in Taiwan has not established the market of PLA recycling and reuse, and the compost processing facilities are not popular in Taiwan. This means the PLA is mostly going to incineration after recycling, losing its green natures.

To solve this problem, ASUS worked with suppliers to develop consumer products made from recycled PLA. We recycled waste PLA containers in the headquarters, including cups of cold drinks from Starbucks and from MOS Burger, and turned them into PLA pellets via crushing, rinsing and dyeing. Injection molding was then used to produce small official supplies. Wastes which would be incinerated were turned into new commodities, showing good examples of circular economy.

In 2018, ASUS became the first corporation in the world to obtain Circularity Facts Program Validation

The circular economy is diverse. Each issue has the characteristic of mutual influence. The corporation needs to establish a quantitative way to track the achievements when promoting the transition to circular economy so that decision makers can have the appropriate data for resource allocation and performance tracking management. In response to this, ASUS participated in the UL 3600 Circularity Fact Validation program. The scope of the program included the corporation’s operation, product recyclability, re-used rate of recycled material, and a zero-disposal assessment of the production line. The overall circulation of the corporate or project was evaluated in a quantitative manner.

The ASUS computer-recycling project recycles wasted computers in a reverse logistics manner. The recycled computers are donated to vulnerable groups after restoration to create a vision of digital inclusion. It is not only one of the company’s most socially influential projects, it is also a good practice scope for the circular economy. This program is used to participate in the UL recycle coefficient verification. The verification covers the products’ early-stage design concepts, which include chemical substance control management, toxic substance reduction, easy-to-disassemble design, and easy-to-recycle design. The verification also covers the later-stage of the product’s life cycle, which includes the establishment and management of the product’s recycling process. ASUS also extends its role in social responsibility to assist its cooperative recycling and refurbishment plant into achieving a zero-waste landfill. Finally, the circulation degree of this project, based on quantitative indicators, is 98%. This result has also been verified through an independent third-party UL.

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ASUS Medical Cloud

Over the years, ASUS has been deepening its applications in various vertical fields. We have cooperated with external parties to improve the quality of life of citizens and driven commercial investment through innovative technologies, such as cloud, big data analysis, and the Internet of Things, building smart cities and supporting sustainable economic development. Among them, the application of cloud computing to medical care is one of ASUS' key innovation points.

With the continuous demographic growth toward an ageing population, the demand for medical care has increased significantly, resulting in the exclusion of medical resources and the shortage of labor. Therefore, the combination of emerging technologies, such as cloud computing, electronic medical records management, hospital information systems, remote care, and even preventive medicine and robot-assisted surgery/care with information and communication technologies can improve medical efficiency and quality and decrease costs.

In 2013, ASUS Cloud partnered with the Taipei City Government to launch five cloud service projects, such as “Health Cloud,” that enabled citizens to upload information, such as home self-care and physical measurements. In 2016, we cooperated with the Health and Welfare Department to implement “Health Care Cloud” and piloted a field service in Chiayi City. We set up “Smart and Health Stations” in 24 community pharmacies in the city to provide blood pressure measurements to people and uploaded the data to the cloud in real time.

In 2018, ASUS joined the Swiss medical data company, Clinerion, to develop the global medical service network system, PhenoFinder. ASUS also built a big data platform called OmniCare to help with medical measurement and tracking. ASUS uses these two platforms as the means to develop new forms of smart medical materials, AI robots, and precision medical solutions.

OmniCare - Building the IoT Medical Internet Ecosphere

OmniCare big data platform connects a variety of smart medical devices for measurement and tracking. It helps hospitals and healthcare centers master the physiological status of patients, strengthens telemedicine/care and health management services, and assists hospitals with developing precision medicine. If hospital systems are connected to OmniCare, the clinical demand information can be obtained using big data algorithm. Last year, ASUS partnered with 8 companies to integrate smart medical devices in the medical exhibition.

PhenoFinder - Decentralized Medical Data Platform for Clinical Trials

PhenoFinder is a global medical service network system developed by ASUS and Clinerion. With its unique global cloud infrastructure, PhenoFinder can solve multicountry clinical trial information integration problems and improve the efficiency of clinical trial implementation through the data integration platform. On the other hand, drug factories that develop new drugs can obtain statistical reports from the platform, which can effectively improve the effectiveness of clinical research, shorten the development time of new drugs, and ensure that drugs enter the market in time. At present, there is a medical center in Taiwan that has joined the PhenoFinder service network. Overall there are nearly 150 hospitals from eight countries around the world that have joined this platform.

ASUS collaborated with IBM Watson to launch AiNurse technology. This gave ASUS' first robot, Zenbo, basic medical monitoring function. The Zenbo robot’s medical care application program has been applied to at least five medical centers in Taiwan. This includes Mackay Hospital, Taipei Veterans Hospitals, Linkou Chang Gung, China Medical University Hospital, and Kaohsiung Medical University Chung-Ho Hospital.

At present, AiNurse is able to integrate electronic medical records. This assists medical staff in their work specialization. As well, all measured physiological information is synchronously integrated to the OmniCare data platform and the final solutions are offered through AiNurse. AiNurse makes remote hospital care more convenient and effective and gradually improves personalized care services. In the future, it will meet the needs of more medical care systems in terms of functions.

In addition to the original positioning of Zenbo - companionship, as the key to the internet of things (IoT), or a smart gateway, the most important role for Zenbo is to connect the IoT devices. Whether it is to integrate home appliances or facilities with institutional public spaces, Zenbo is able to perform various applications based on specific needs. For example, if a healthcare organization wants to provide healthcare education to residents, it can insert digital information related to health into Zenbo. The organization can also transmit relevant information through the robot during the activities. As a result of this characteristic, Zenbo has gradually been introduced into the medical and long-term healthcare field.

Participatory Urban Living for Sustainable Environments, PULSE

The PULSE project originated from the EU Horizon 2020. This plan seeks to develop a public hygiene policy based on big data. It was hosted by the Polytechnic University of Madrid, Spain and connects 12 teams across different countries. The project proposes to combine urban environment, wearable devices, and lifestyle (which can act as data sources) to analyze and establish three models of disease risk, urban health level, and air pollution forecast. It transforms public hygiene from a reactive system to a predictive system of risk and elasticity. Active forecast system is generated to improve urban public health, thereby accelerating the realization of big data vision.

ASUS cloud has been part of the PULSE project since April 2018. With years of experience in the operation of smart healthcare, ASUS has brought more innovative applications and diversified smart medical devices to the project through the OmniCare Medical IoT Platform, AI virtual healthcare assistant, and medical data integration technology. Keelung, which acts as the pilot site in Taiwan, has been listed as a city test site together with Birmingham, New York, Singapore, Barcelona, Paris, and Pavia. A series of pilot services and collaborations have been conducted. These include a study on the relationship between air pollution and asthmatic respiratory diseases as well as a study on the relationship between lack of exercise and Type 2 diabetes.

As a result of the changes in society and lifestyle, the ageing of population is becoming a trend. Therefore, using innovative technologies can not only change the traditional medical care model and improve efficiency and quality, it can also combine the information technology industry to explore market and business opportunities. This will help contribute to human society in the sustainable blueprint of the global SDGs planning.

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Task Force on Climate-related Financial Disclosures (TCFD)

Considering that the Paris Agreement aims to keep global warming below 2℃ above pre-industrial levels, global industrial development is expected to shift toward a low-carbon economy. To protect the global financial system from serious impacts during this transition period, the Financial Stability Board (FSB) established the Task Force on Climate-related Financial Disclosures (TCFD) in early 2016. In June 2017, the TCFD officially released the “Recommendations of the Task Force on Climate-related Financial Disclosures” to provide more explicit guidelines on climate change’s financial effects on global businesses.

The disclosure framework of TCFD consists of four core elements: governance, strategy, risk management, and metrics and targets. Each element involves a range of climate-related financial disclosures. ASUS believes that TCFD recommendations can promote long-term strategic management and mitigate risks. TCFD’s focus on climate resilience also encourages firms to develop forward-looking targets and adopt appropriate governance structures to monitor progress toward meeting them.

ASUS Supports Paris Agreement and TCFD Framework

ASUS publically supports TCFD, and we follow the framework to disclose 4 core elements: governance, strategy, risk management, and metrics and targets.

Governance

On the issue of climate change, although ASUS is not in an energy-intensive industry, it still maintains a “no regrets policy” and exerts its influence on the IT industry in terms of climate change mitigation. In 2009, ASUS took the lead in assessing the carbon footprint of the product life cycle, released the world’s first laptop with carbon footprint certification. And through software and hardware innovations, we also completed the world’s first carbon-neutral laptop. Based on the results of the life cycle assessment, we established the carbon emission reduction for the operations and energy efficiency improvement target for the products.

Strategy

ASUS has integrated climate change-related issues into its operational strategy and tracks and manages them in a qualitative and quantitative manner. We support the targets set out in the Paris Agreement, meaning that in addition to our innovation efforts to mitigate the effects of climate change, we have developed strategic responses in the following areas based on the identified material climate risks and opportunities.

2DC Scenario Analysis

According to a report released by International Energy Agency (IEA), in the 2℃ scenario, the global annual increase of 3% in energy use needs to be reduced by half per year. That is to say, under the growth in “business as usual”(BAU) conditions, the energy efficiency of products needs to increase by 54% by 2030. Under such circumstances, ASUS expects that the global product energy efficiency laws will become increasingly strict and pose potential risks; on the other hand, investing in the development of energy-efficient products will also expand the green product market and create business opportunities. As a result, ASUS has integrated its product energy efficiency target into its operational strategy; it aims to increase product energy efficiency by 50% by 2025.

On the other hand, the Nationally Determined Contribution (NDC) target set by the Taiwanese government is to reduce greenhouse gas(GHG) emissions in BAU by 50% before 2030. Although ASUS is not in an energy-intensive industry with high GHG emissions, we also take responsibility for reducing said emissions and saving energy. To demonstrate ASUS’ ambition, we have set an absolute target of a 50% emissions reduction by 2025.

Electricity consumption in our offices accounts for 99% of our GHG emissions. We started to introduce the ISO 50001 energy management system in 2015 to identify high-energy consuming hotspots and equipment, with the aim of gradually improving the energy efficiency to reduce 1% of electricity consumption annually. Meanwhile, as for the choice of location for ASUS’ new building, we chose one that is accessible for mass transportation to reduce the GHG emissions from employees commuting, while also taking the platinum level-the highest level of green buildings-as the requirement for the construction of the building to reduce the overall environmental impact.

Risk Management

ASUS integrates climate-related risks and opportunities into the overall identification, assessment, and management process within the company. We consider the risks associated with climate change over the short-, mid-, and long-terms and continuously monitor government decrees, international trends, industry practices, and so on to propose future viable directions; these include ISO 5001 energy management systems, the improvement in products’ energy efficiency, solar system installations, Renewable Energy Certificates, and other programs to reduce impacts and manage the potential risks of climate change.

For management indicator, targets, and detail TCFD report, please visit Energy Management and Addressing Climate Change.

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Environmental Profit and Loss Program (EP&L)

Besides the corporation’s financial performance, the environmental impact of its operation and manufacturing processes has become the focus of many stakeholders. However, during the discussion, we found that uncovering various environmental impacts such as carbon emissions, waste, and wastewater volume is only meaningful to those with relevant knowledge background. As for the general stakeholders, they may have doubts in those parameters. For example, when corporations commit to environmental protection, they ask questions such as: What is the most important source of pollution? How to compare the pollution severity resulted by one ton of waste, one ton of wastewater, and one ton of GHG? Is the company's prevention direction correct? Are the countermeasures perfect?

ASUS has adopted the concept of "digital measurement, technological management" to allow stakeholders to understand the corporation’s ustainability achievement. Moreover, this concept provides decision makers and managers with the reference to conduct resource allocation and performance tracking. By using monetized value to evaluate the environmental profit and loss of a product in their life cycle, a net loss or profit to the environment as a result of the company’s operation can be shown. This helps the corporation review its sustainability achievement year by year.

The environmental profit and loss are assessed based on life cycle. It measures the environmental and social impacts of the products from raw material extraction, component manufacturing, and product assembly. Different environmental consequences can be compared using the monetized results. This includes the loss values that result from climate change due to GHG in the agricultural and ecological field. These kinds of environmental effects become comparable. Internally, it serves as an important reference for decisionmaking units in the future when developing products or managing supplychain. Externally, simple language can be used to deliver ASUS’ environmental sustainability achievement to stakeholders.

In 2018, ASUS became the first brand in the global IT industry to publish an environmental profit and loss assessment report. Using the experience from this project, ASUS plans to incorporate this method into the current procurement process and establish its sustainability procurement performance indicator in the supply chain.

After completing the pioneer project, we expanded the scope to covered 60% of the revenue and calculate the environmental impact of supply chain .Based on the manufacturing process characteristic of the product, 4 environmental indicators (GHG, water resource, waste, and water pollution) are selected to evaluate environmental profit and loss. The analysis result shows that the impact of products supply chain is approximately $387 million US Dollars, and the environmental impact in different phase is shown below:

According to the analysis of the project, water pollution had the largest impact among all environmental aspects, followed by greenhouse gas emission, and water consumption the least. The details were as follows:

Analysis of the environmental impact in different phase of supply chain:

In Tier 0 ASUS Operation and Tier 1 OEM Assembly, and Manufacturing of Major Components: GHG emission had the greatest environmental impact.
In Tier 3 Mining and Manufacturing of Raw Materials: water pollution had the greatest environmental impact.


The analysis demonstrated that GHG and water pollution in supply chain operations created the greatest environmental impacts. Therefore, ASUS increased the level of requirements to qualified suppliers. From 2019, qualified suppliers must possess ISO 14001 environmental management system verification in addition to ISO 9001 quality system verification to show that they could reduce or avoid the environmental impact in the supply chain.

On the other hand, this also highlighted the importance of external environmental factors (in addition to traditional factors such as cost, quality, technology, delivery, and service) when selecting suppliers, thus the actual life cycle costs (LCC) can be obtained. Therefore, ASUS would further promote the ISO 20400 sustainability procurement plan by including the sustainability as a consideration of a qualified supplier. ASUS will use our purchasing power to drive the supply chain towards sustainability transformation.

In the next stage, the scope of the environmental profit and loss project will expand, and we will continue calculating the annual environmental profit and loss intensity of each product line to confirm that the resources invested and the implementation of green product strategies in the supply chain environment management can achieve actual benefits, and gradually establish a complete supply chain environmental gain and loss assessment.

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Sustainable Value Creation

ASUS continuously cares about sustainable trend development and is highly passionate about promoting sustainable innovation projects. We published our Type III Environmental Product Declaration and announced the world's first carbon-neutral laptop in 2009. The Product Declaration quantifies the impact of various products on the environment in order to easily track, manage, and continually improve their environmental performance. In 2016, we used the British government’s Social Return on Investment guidelines to monetize the influences of the value of digital inclusion program. Subsequently, we received accreditation from Social Value International and published an SROI report that was the first Taiwanese report to be accredited by a global organization within the Asian technology industry. In 2018, referring to the Natural Capital Protocol, we monetized the impact of the supply chain on the environment and society. In addition, we published our Environmental Profit and Loss Evaluation Report on laptops, leading the industry to consider more deeply the issue of the monetization of the natural environment. ASUS believes that its efforts will raise awareness of this issue. We not only value financial performance but are also committed to using a stable methodology to construct a model to measure the value of money on environmental and social aspects. We are pleased to see that more Taiwan’s companies are embracing the management of monetization along with us. Currently, ASUS persistently moves to a new sustainable and integrated model of “digitizing data, adopting scientific management.” Through this model, ASUS will view sustainable business performance from a stakeholder perspective with the spirit of "Wiser Together" to create shared value.

ASUS leverages the internal and external resources to drive the overall value chain into sustainable responsibility and further establishes a sustainable management model based on the Triple Bottom Line, social, environmental, and financial parts. ASUS makes the creation and analysis of monetization for the internal sustainable decisions and key management indicators to pursue further maximum of sustainable value creation.

In terms of Information and Communication Technology(ICT), the key factor for sustainability management is to thrive with the supply chain. We are deeply aware that we cannot ignore the external impact on the environment that results from the product manufacturing process; this was one of the key findings of our 2018 Environmental Pro-fit and Loss Evaluation project. Therefore, ASUS’ integrated evaluation analysis focuses on operation management and product supply chains which includes factory assembly lines, parts and components manufacturing, and raw material suppliers. At Asus, we have fully reviewed the impact of economy, tax, environment, and society; created an impact pathway approach; and identified the relevant influences. We wish to monetize the externalities and benefits caused by ASUS and the supply chains, further enhancing our sustainability management.

By referring to the monetization methodology from Total Impact Measurement and Management(TIMM) proposed by PwC, ASUS launched the Sustainable Value Creation project in 2018. Evaluating Sustainable Value Creation is used for analyzing the source and results of sustainable value. We evaluated the influences on the perspective of stakeholders, including the economy, tax, the environment, and society, and also measured the sustainable value of ASUS operation and product supply chains. Through this project, we calculated the values of the impact of economy and taxes according to ASUS’ Parent-Only Financial Statements in 2018, which were NTD$10.67 billion and NTD$10.8 billion, respectively. In terms of the environment, the negative impact of ASUS operation and the supply chain of laptops and desktops consisting of 60% of sales in a year is valued at NTD$11.7 billion. The social impact of ASUS operation is valued at NTD$10.34 billion. Overall, in 2018, the sustainable value was equal to nearly NTD$10.39 billionNote. The value sources are based mainly on employee compensation and development, intangible assets, profits, and the sustainable value created by sustainable supply chain management.

The economy and tax impacts mainly use profits, research and development costs, intangible assets amortization, and profit-seeking enterprise annual income tax in ASUS’ individual company financial statements. These express the financial satisfaction and livelihood maintenance that enterprise management brings to shareholders as well as the financial support for local governments to increase the national welfare. The environmental impact arises mainly from the emission of pollutants and consumption of resources produced by the supply chain, which negatively affect both natural ecosystems and society. The evaluation results show that water pollution is the major impact, followed by greenhouse gases. Regarding the social impact, the evaluation includes employees’ and development, sustainable supply chain management, intellectual capital, and digital inclusion, thereby revealing the social impact on employees, supply chain, and society activities. For employees, this sources includes the compensation and welfare and educational training to meet employees’ livelihood maintenance and increase their career competence.

We analyzed the sources and results of sustainable value and identified that the main sources of a negative impact on the environment are the greenhouse gases and wastewater pollution that are generated in the supply chain’s operational process. Aligning with the Environmental Profit and Loss Evaluation project and considering the popularity of environmental management systems that import supply chains, ASUS has increased its qualification requirements for suppliers. Starting in 2019, suppliers must not only have ISO 9001 quality management certification but also ISO 14001 environmental management certification. We hope to phase in the comprehensive management systems to reduce the environmental impact of supply chains. We have also improved the supply chains’ water pollution management and are asking suppliers for reports on water pollution testing and its prevention and inspection management. The major positive impact include the intangible assets that employees compensation and development. For a business, employees are the most important asset. ASUS deeply believes in a people-centered corporate philosophy, regulating reasonable and competitive salary and welfare rules and providing diverse and flexible educational training plans. Intangible assets include the expenditure of research and development personnel and research and development equipment and material costs. These assets demonstrate a company’s determination and willingness to invest in innovation and develop its people’s skills.

In addition, from a stakeholder perspective, the analysis shows that beyond ASUS employees, supply chain is the key role of the environmental and social impact. We expect that this impact will expand due to ASUS sustainable supply chain management. Consequently, ASUS plans to engage in sustainable procurement from cooperation with new suppliers and continuous operation management and quarterly supply chain reviews. These strategies will help ASUS fully implement the supply chain’s sustainable procurement management. We hope to work with our supply chain partners to continue growing and improving, gradually increasing ASUS’ overall positive impact and sustainable value creation.

This year, the implementation of the Sustainable Value Creation project identified the major paths of four impact: the economy, tax, the environment, and society. We also showed the impact value in the way of monetization. This not only shows a consistent communicative language for stakeholders to compare the impact of diverse sustainable activities but also gives managers effective guidelines for integrated decision-making and management within a company’s limited resource allocation. Please visit the CSR website to refer to the full version of the 2018 Sustainable Value Creation report, which outlines the project’s methodology and research limitations.

In the future, ASUS will continue to stay ahead and overcome research limitations. We wish to cover more completed aspects of ASUS products and services, with the goal of further expanding our influences to exhibit the sustainability that ASUS sees as one of its fundamental responsibilities.

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