Samsung Electronics is facing increasing pressure for not doing much to reduce fossil fuel emissions, and the South Korean company is far from environmental protection commitments. behind their rivals Apple and Taiwanese chipmaker TSMC.
Analysts and investors alike have warned that Samsung’s reluctance to match its rivals’ environmental commitments poses “systemic risks to its future as customers and governments increasingly demand low-carbon supply chains. Unlike Apple, TSMC and fellow South Korean chipmaker SK Hynix, Samsung has not publicly committed to 100 percent renewable electricity use globally.
The world’s largest maker of smartphones and memory chips, Samsung’s operations in South Korea and Vietnam together account for more than 80 percent of the company’s total electricity consumption, which is largely fueled by coal and natural gas.
Park Yoo-kyung, head of responsible investment and governance for the Asia-Pacific region at Dutch asset manager APG, said: “In terms of renewable energy, Apple is taking global social responsibility with a lot of fanfare, but we don’t see Samsung doing it. Something like that. Samsung seems to think: ‘We’re a manufacturing company, we’re only responsible for selling things, and then our responsibility ends there.’ Yet this is a business model of the 20th century, and a It belongs to the management philosophy of the 20th century.”
Critics argue that Samsung has been reluctant to chart a path to carbon reduction because it relies on cheap electricity from South Korea’s state energy monopoly. In 2020, South Korea had the second-lowest share of renewable energy in the G20, ahead of only Saudi Arabia, according to the International Energy Agency.
Kim Young-woo, an analyst at SK Securities in Seoul, said: “If Samsung fails to meet ESG standards, Samsung may not even be an option for overseas customers in the long run. Environmental concerns will soon be borne by non-tariffs. barriers in the form of systemic risk for the company.”
Samsung has already decided in principle this year to sign up for the Re100 initiative, a global program that encourages companies to commit to 100 percent renewable electricity in their global operations, according to a person familiar with Samsung’s strategy.
The source said that Samsung has not yet decided when it will announce the plan, and it is unclear whether Samsung will make the same “Scope 3″ commitment as Apple, making its entire supply chain powered by renewable energy.
In a statement, Samsung said: ” Samsung Electronics has achieved 100 percent renewable energy usage across all of our operations in the U.S., Europe and China. We are exploring ways to achieve 100 percent in other regions as well. renewable energy, including where securing renewable energy can be challenging.”
The total GHG emissions of Samsung Electronics and its supply chain in 2020 are equivalent to 29,532 tons, roughly equivalent to the emissions of the entire country of Norway. A survey by energy think tank Ember found that solar and wind will only account for 4.7% of South Korea’s electricity generation in 2021, less than half the global average.
Citing Samsung’s 2020 consumption data, Ember analyst Uni Lee said: “Even if all of South Korea’s solar and wind power generation is only supplied to Samsung Electronics, it still does not cover the company’s global consumption.”
Daul Jang of Greenpeace East Asia said Samsung was reluctant to move away from fossil fuels because the company could buy electricity at cheap industrial rates from South Korea’s state-owned energy monopoly Kepco. “South Korea’s industrial electricity prices are too low, and its emissions trading program is too weak,” he said, noting that despite South Korea’s per capita GNI being more than three times higher than China’s, South Korean industrial companies pay more for electricity than their Chinese counterparts few.
Eric Christian Pedersen, head of investments at Nordic Asset Management in Copenhagen, said the company had told shareholders that they were “still developing a policy on this issue”, but the South Korean-made ones could be. Renewable energy is not enough to meet Samsung’s needs.
Critics say that given Samsung’s own market power and historical influence on South Korean policymakers, it is up to them to proactively commit to ensuring renewable energy security.
“In the U.S., because companies have committed to buying renewable energy, producers have the right incentives to borrow and invest, and they believe they will attract consumers,” Zhang said. “But Samsung has not made the same commitment, they are hindering this process in South Korea.”
However, Samsung’s reluctance to articulate its position has left investors skeptical that the promise will be fulfilled with sufficient force.
Kiran Aziz, head of responsible investment at Samsung shareholder KLP Asset Management in Oslo, said: “It’s hard to say what Samsung is going to do because they haven’t communicated any kind of climate and clean energy plan in the short or long term. “Even if they make new commitments, shareholders will look very carefully at whether the company is serious enough about these plans given the long silence to date.”