Samsung to invest $7 billion under plan to tame rising emissions

The world's largest memory chip maker plans to eliminate Scope 1 and 2 carbon emissions. PHOTO: REUTERS

SEOUL - Samsung Electronics will invest 7 trillion won (S$7 billion) in green initiatives and lobby South Korea to add more clean energy as the electronics giant looks to reverse a rise in emissions and zero out direct pollution by mid-century.

The world's largest memory chip maker, which has seen its climate footprint swell in recent years as it expanded energy-intensive manufacturing lines, plans to eliminate carbon emissions in categories known as Scope 1 and 2. Samsung has not developed goals to reduce Scope 3 pollution like some peers, though intends to set targets in future.

South Korea's biggest company also aims to switch overseas factories entirely to renewable electricity within five years, though it argues it cannot yet pursue a similar target for its most energy-hungry domestic plants - which account for the majority of production - because of constraints on the availability of clean power in the fossil fuel-reliant nation.

Samsung has long been criticised by investors and activists over a slower approach to climate action than industry peers such as Apple, which says its own operations are already carbon-neutral and has been pressing suppliers to follow suit.

"Addressing climate risks has been particularly challenging with our complex business portfolio," Ms Kim Soo-jin, head of the environmental, social and governance strategy group at Samsung Electronics, said in an interview. The firm's status as a manufacturer of a wide range of electronics and its extensive supply chains mean "the environmental pressure on our shoulders has been extremely heavy", she said.

A new strategy announced on Thursday includes spending on carbon capture and storage, measures to reduce water consumption and the release of gases during semiconductor manufacturing, work to boost the energy efficiency of its products, and improvements to the collection of electronic waste for recycling.

While cutting direct emissions is a priority, Samsung will also consider the use of offsets in voluntary carbon markets, Ms Kim said.

As the biggest electricity user in South Korea, Samsung's key challenge remains the country's grid. Fossil fuels accounted for more than 65 per cent of electricity generation in 2021 and plans are being studied to scale back proposals for more renewables as President Yoon Suk-yeol's government touts a potential longer-term build out of nuclear power.

Samsung's operations consumed 32,322 gigawatt-hours (GWh) of energy in 2021, including 25,767 GWh of electric power, the company said in its most recent sustainability report. This compares with South Korea's wind, solar and hydropower generation of 31,323 GWh in the same year, according to data compiled by BloombergNEF.

The company's emissions have risen in recent years as a direct result of the installation of new semiconductor manufacturing lines, according to its report.

Competition for renewable electricity is also likely to rise with all of South Korea's key conglomerates now pledging to run their operations using solely clean energy.

Samsung will ask Mr Yoon's administration for more help. "We are planning to voice industrywide concerns over the higher cost of renewable energy, and ask for the government's policy support for the development of various climate-related innovations," Ms Kim said.

Local plants for consumer electronics will move to 100 per cent renewables by 2027, Samsung said in a statement. The company aims to run its semiconductor foundries entirely on clean sources by 2050, according to Ms Kim.

"The Korean government is not doing much to support companies, putting the entire economy at risk of losing its industrial competitiveness," said Professor Hong Jong-ho at Seoul National University's Graduate School of Environmental Studies.

With Samsung's enormous influence, it should be the one "playing an advocacy role" in pushing the government for policy changes, he added. BLOOMBERG

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