Stage 4: Difficulties

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5.1.5 Stage 4: Difficulties

During the implementation of carbon footprint labelling, Acer encountered a few problems discussed in the below section. Bottlenecks delaying the acquisition of the carbon footprint label were also identified and discussed.

The complexity of the manufacturing process makes electronic products extremely difficult to conduct the life cycle assessment. The source of raw material must be traced back to the oil extraction process which later becomes the casing for notebook and computers. Other than the plastic part of the notebook, there is also the metal components which make it difficult to trace the carbon emission. On the other hand, the complexity of the supply chain also leaves rooms of uncertainty.

Taiwan is a strong electronic products manufacturing base because of the high quality manufacturers offer. Therefore, the manufacturers are usually partners of multiple brand companies. When there are multiple brand companies sharing the carbon emission associated with their purchase order, difficulties arise because of their conflict of interest. Therefore, the amount of carbon emission allocated to each company is a source of conflict and problem. In contrast with sharing of resources, the more you get the better, sharing carbon emission is the opposite, getting less is better. Companies can argue with manufacturers why their share of carbon emission is greater than others while they all use the same facilities and are made in the same building. Manufacturers find this challenging as they do not want to ruin the relationship with any brand companies. Another problem comes from the scope of emission that needs to be included in the assessment. Some companies may only consider the emission associated with the manufacturing process, while others will trace all the way back to the production of the raw materials. When the scope is inconsistent, the ones that conduct a more complete assessment will in fact has higher

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emission level and creates a negative and falsified image in the public. While the ones that have limited the scope to a certain stage of the life cycle will generate a lower emission image and mislead the public. With all these challenges in mind, acer nevertheless conducted the life cycle assessment and applied for carbon footprint certification.

1. Problems Encountered

1) Absence of industry standard-no comparison with products

Since life cycle assessment is not a universal standard among the electronic goods industry, the result of life cycle assessment cannot be used as a source of comparison among different companies. Therefore, it cannot act as a tool for consumers for their purchase decision making either. This is not desirable for companies who have taken steps into making environmental friendly products because they cannot tell the consumers about a label which does not have apparent meaning at the moment. The comparison would be applicable when the company does internal comparison between products of the same series and therefore uses the same scope and measurement method.

2) Suppliers have multiple partners-hard to allocate the amount to one specific company

Acer’s suppliers are often partners of other similar electronic goods companies and the manufacturing facilities are also used for other clients’ orders as well. Here is the problem: one factory produces orders from 5 clients, each with different manufacturing process and components; how to identify how much each order contributes to the total GHG emitted at the end of the month? Other than the complexity of allocating GHG emission, another issue comes from the strength of bargaining power among different clients. When there is a client with an order of

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larger volume, if the client wants to display a lower emission status, the client might bargain for a low allocation of GHG emission and the supplier will have little resistance toward this request because the client has high bargaining power.

Therefore, the allocation leads to a complicated situation that involves bargaining power of numerous parties.

3) Cost of assessment increases as information gets more complete

As mentioned in the previous point, the more complex the assessment is, the more cost it would incur as more labor and time must be incorporated to really track the GHG emission of each process and component. Furthermore, as more labor and time is put into the process, in the end, the GHG emission might increase as a result.

4) Multiple GHG emission database to choose from

The life cycle assessment for Acer suppliers is to refer to an existing database which has the GHG emission for component and process associated with the products. Since there is more than one database, suppliers can choose from the databases to use as reference. This is of convenience for suppliers, but results in inconsistency in the result of the life cycle assessment. For example, if supplier A uses database 1 for model 1, then next time, supplier A uses database 2 for model 1, the result will be different between the two models although the components and processes are the same.

5) For electronic goods: improved function vs. reduced emission

Because electronic goods differentiate by its function, therefore, function is the key feature consumers look at during their purchase decision making. A concern arises when a product with integrated multiple function but same amount of GHG emission as the previous model vs. a product with lower GHG emission but same function as the previous model; Which one would be more desirable?

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6) Carbon footprint label vs. export competitive edge

Acer has a market share of 11.2% in world wide PC, with especially high market share in Europe. If the carbon footprint label becomes mandatory on all electronic products, unless Acer manufactures its products in Europe, Acer will lose its competitive edge due to the distance the products travel from Asia to European market. The logistics will comprise a significant portion of GHG emission if the products were to be made in Asia and shipped to Europe. According to Mr.Lai, the carbon footprint of product logistics from Taiwan to United States will be done this year.

7) Conflicting view on carbon footprint label

As a major vendor of electronic goods, Acer has the pressure to act as the leader in forefront development. Acer’s investors and foreign market consumers also expect Acer engage in sustainable development. However, the external expectation is not widely instilled within the organization. Therefore, communication of the vision of sustainable development is an important step to making carbon footprint labelling a widely accepted practice. Furthermore, engagement in CSR activities does not offer immediate result, it will take time to reflect on the company’s performance and corporate image. Therefore, some employees do not detect the urgency of this matter.

8) Room for reduction is limited since the product is already energy-efficient

For electronic goods, the major emission not only comes from production but also consumption of energy. Therefore, the ways to reduce GHG emission will be from these two parts. Currently, most electronic goods, especially notebooks, have increased their battery hour to their maximum level; therefore, limited improvement can be done on battery hour.

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2. Bottlenecks

In the ICT industry, there are two major bottlenecks, one is the complexity of its supply chain and the other is the time-consuming process for obtaining carbon footprint label for short product life cycle electronic goods.

1) Bottleneck: Complexity of ICT industry-difficulty for data collection

Because life cycle assessment is not yet an industry standard, not all suppliers are doing the assessment of their GHG emission. As a result, suppose there are 30 suppliers, even though 29 of 30 suppliers have completed life cycle assessment of their part, the one remaining supplier, who hasn’t started, cannot provide the GHG emission of his part, as a result, complete life cycle assessment of the finished product cannot be done. The problem with life cycle assessment is that it requires input from all parts along the supply chain. Even though the life cycle assessment might be 99%

complete, lacking that one single 1% is crucial to developing the complete life cycle assessment result. On the other hand, since Taisun handles manufacturing itself, it has the ability to implement the practice to all of its supply chain; therefore, there will not be one part of the supply chain not implementing the practice while others are waiting for it. Because Acer does not have total control over its suppliers and it relies on suppliers to produce its goods, it must convince suppliers one-by-one to audit the GHG emission of their parts.

2) Bottleneck: Application and Certification takes a long time

In the case of Acer, model AO532 was taken off the market soon after its receipt of carbon footprint label. The reason was because a new version of the model was introduced because PC has more frequent updates and technology advancement than business notebook. On the other hand, after life cycle assessment has been completed, the processing time to get approval to use the carbon footprint label is one to two

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months. Therefore, even though a product is ready to be launched into the market, it has to wait for one to two months to receive the carbon footprint label from EPA then launch the product along with the label into the market. For high-tech products, the key is latest technology. Because high-tech industry competes on the speed of innovation and technology development, whenever a new technology is developed, it must be introduced to the market as soon as possible before competitors do. One step slower than others will result in dramatic loss of market position and share. Therefore, the cost of waiting for the carbon footprint label is too high for high-tech industry players. The situation that will be more appropriate for Acer will be to obtain carbon footprint label on business notebook models because these model emphasize more on stability and reliability rather than innovative and cool features. Coupling short product life cycle with long processing time, carbon footprint label cannot fully exert its value and efforts put in for obtaining the carbon footprint label are all wasted.