November 29, 2024

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TVs are displayed at a local electronics store in Seoul (Yonhap)

South Korean electronics giants are facing calls to accelerate renewable transition and set up climate goals across the supply chain, despite earlier pledges to go carbon neutral across their operations.

In a report Friday by environmental group Greenpeace and grassroots organization Stand.earth, Korean electronics goods sellers Samsung Electronics and LG Electronics were ranked "F" in terms of progress toward reducing greenhouse gas emissions, on the scale of "A" to "F."

This stems from the disparity between the brands' efforts to decarbonize their own operations and its supply chain partners, reflecting the "lower levels of ambition in their commitments outside their direct operations, a lack of supply chain transparency," according to the report titled "Supply Change."

Moreover, the companies had often sought to outsource their emissions to key suppliers, whose renewable energy ratio remained below 25 percent. According to Greenpeace, over three-quarters of electronics industry emissions were generated from the supply chain.

"Consumer electronics brands like Samsung Electronics and LG Electronics cannot continue to ignore the climate impact of their supply chain," noted Greenpeace East Asia campaigner Xueying Wu.

"(Samsung and LG) should not only set targets to decarbonize their supply chains, but they should establish detailed pathways and systems of accountability to ensure that the targets are met. ... (They should) provide incentives and financial support for suppliers to achieve this target."

As a result, both Samsung Electronics and LG Electronics were ranked "D+" in its decarbonization efforts within their operations, and "F" across their supply chain.

The two companies had powered their operations with significantly less amount of renewable energy overall, compared with US tech giants like Alphabet, Apple and Microsoft. Samsung's renewables adoption ratio came to 20.48 percent and LG's stood at 4.6 percent, compared with the 100 percent for Alphabet, Apple and Microsoft.

The report also pointed to the usage of less than 1 percent of renewable energy sources with high or medium impact -- through power purchase agreements, renewable energy investment and onsite renewable power generation.

Moreover, Samsung’s goal to achieve 100 percent renewable energy in the United States, Europe and China relies heavily on renewable electricity credits. Such strategy has been "largely abandoned" in the global consumer electronics scene, according to Greenpeace.

Meanwhile, the estimate also showed that Korean component vendors also lagged behind with regard to a progress in renewable transition.

Chipmaker Samsung Electronics and flat-panel display maker Samsung Display were ranked "D+," while display component provider LG Display and chipmaker SK hynix got a "D" grade under Greenpeace's criteria.

Greenpeace cited their slow renewable transition speed, respective net-zero targets by midcentury, which are later than the average commitment year, 2028, for companies that joined the RE100 initiative, as well as lacking timelines for renewable achievement. The downside factors were partly offset by their transparency in providing environmental data.

The renewable transition rate of Samsung Display, LG Display and SK hynix were no larger than 11 percent, and their power purchase agreements, renewable energy investment and onsite renewable power generation combined accounted for less than 1 percent of the total power usage, respectively.

Greenpeace's estimate was based on the analysis of 24 electronics goods makers and suppliers. Five Korean firms were among the list, including semiconductor supplier and consumer electronics goods maker Samsung Electronics, premium white goods maker LG Electronics, flat-panel display makers Samsung Display and LG Display, and chipmaker SK hynix.

By Son Ji-hyoung (consnow@heraldcorp.com)