Risk Management
HTC manages corporate risk with a focus on sustaining value for the shareholders and stakeholders. We have established an appropriate control mechanism after careful consideration of all the various operational uncertainties that ensures a rapid response to uncertainty, as well as to any attendant risks and opportunities. Such careful risk management enhances our ability to create value.
Management of Operating and Financial Risks
HTC has never made high-risk, high-leverage investment, yet, as a part of our long-term business strategy, we are still positively evaluating the risks and benefits of introducing new technology. To remain responsive to the potential risks caused by increased costs as a result rapid industrial development, we control operating cost risks by strengthening the functions of our products, reducing overall costs, and strictly controlling expenses.
We carefully evaluate all kinds of uncertainties of business operations, and thereafter accordingly formulate control mechanisms. For example, business continuity planning (BCP) is set up to cope with the uncertainties of different situations, including risks and opportunities derived, and to increase value-creating ability.
Working capital required to support HTC business operations over recent years has been supplied mainly from cash on hand. As the corporation has not taken out long-term loans, fluctuations in interest rates have had no effect on the Company’s liabilities. HTC is prudent in its financial policies, and our asset allocation decisions prioritize security and fluidity, with most funds kept in time deposit accounts.
In 2021, HTC foreign exports accounted for around 83% of our total business revenues. HTC’s revenue are denominated primarily in the US dollars(USD) and Euros (EUR), the manufacturing costs are denominated primarily in US dollars, so the significant fluctuations in the international exchange rates may affect the operating income, operating costs and operating net profits in foreign currency denominations. Apart from efficient management of the quality and payment cycles of its foreign currency denominated accounts receivable, HTC uses forward exchange contracts to minimize its forex risk.
Protection of IP Rights
HTC regards R&D and innovation as an essential force needed for the company to remain sustainable and competitive. In particular, the protection of intellectual property rights is a key to maintaining our brand value. The protection we put on our intellectual property rights covers four areas: patents, trademarks, copyright, and trade secrets.
In terms of patents, HTC has not only actively defended patent lawsuits against patent trolls, as well as filing an infringement lawsuit against HTC in courts in America, China and countries in Europe in order to protect the rights of HTC. In order to strengthen the competitive advantage of products, HTC has also obtained patent authorization from major international companies in order to rule out obstacles of patents.
In terms of trademarks, HTC has actively applied for trademark registration in various countries in order to acquire important trademark rights. HTC has also actively and closely worked with customs and local police agencies in various countries to crack down on counterfeited goods and protect HTC’s business reputation. HTC has also actively investigated the situation of HTC’s registered trademark abuse in various countries, and actively took legal actions with law enforcement agencies in various countries to protect the company's rights and interests.
Additionally, in terms of copyrights and business secrets, HTC clearly stipulates employees' intellectual property rights in the employment contract and demands employees to comply with HTC's intellectual property related regulations. The Ministry of Justice also collaborated with the Information Center, strictly restricting employees' internal data access authorization, such as software program codes, R&D data, unlisted product business information, etc. In addition, in order to prevent leakage of business secrets, program codes, or confidential Information, HTC has also set up relevant regulations for the management and has signed a confidentiality contract with specific persons in order to protect business secrets.
Management of Climate Change Risk
HTC joined the Carbon Disclosure Project (CDP) in 2008. We voluntarily disclose information about our climate risks, future development opportunities, emissions, and strategic management mechanisms.
In 2021, HTC's rating on the CDP climate change questionnaire reached B- level (the international average level is B-). In the 2021 CDP Supplier Engagement Rating (SER), HTC was rated as B level (international average is level B-). The Supplier Engagement Rating uses the responses of the company's CDP climate change questionnaire in terms of governance, objectives, scope 3 emissions, and value chain participation to evaluate the performance of supplier engagement.
In addition, HTC keep requiring our suppliers to respond HTC Suppliers GHG Emission Survey in 2021, proactively contributing its corporate influence, and calling on its supply chain partners to work together in carrying out further assessments and actions for climate change. The supplier response rate in 2021 reached 100%. In 2022, HTC will initiate a full scope carbon emission analysis, calculation and assessment based on the SBTi methodology, along with the development of a Net Zero Emissions roadmap, outlining the short-, mid- and long-term decarbonization strategies and management indicators.
Climate-related Financial Disclosure
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Framework
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HTC Action Plan
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Governance
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• In 2021, HTC CSR Committee members will identify the potential impact of various Topics within and outside the organization based on industry relevance, including the identification and assessment of climate change-related risks, and responses to climate impacts. The CSR Committee reports annually to the Audit Committee of the Board of Directors on annual ESG performance and targets for the next year, including Topics related to climate change.
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• In early 2022, the HTC CSR Committee was promoted to the ESG Committee, with our chairperson Cher leads the ESG Committee as the chairperson. Senior Vice-President Madeline Chen was appointed Chief Sustainability Officer. Several task forces were placed under the Committee, including the Climate Change and Carbon Management Related Team. The ESG Committee reports directly to the Board.
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Strategy
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The virtual reality products and smart devices produced by HTC, combined with a new way of operation, life, work, learning and travel, will help users to achieve the goals of energy saving and carbon reduction. Through continuous performance demonstration, management mechanism promotion and system establishment, as well as planning at different stages of environmental protection cooperation between society and enterprises, short-, medium- and long-term goals of sustainable development can be achieved gradually.
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Risk Management
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In order to identify and evaluate current and future activities related to sustainable operations, and products and services that may cause significant impacts or risks, the HTC risk assessment team will conduct regular organizational risk assessments, including climate change status, serving as a basis for formulating policies and goals. The evaluation results are as follows: In 2022, the risk assessment mechanism recommended by TCFD will be introduced to assess specific Topics of climate change and to understand potential financial impact.
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Indicators and Goals
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The mid-to-long-term plan is to reduce carbon emissions by 5 ~ 8% in 2025 (2020 is selected as the basis).
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• Since 2009, ISO 14064-1:2006 verification statement has been introduced and continuously acquired in order to fully grasp the energy use. Therefore, energy-saving strategies and actions can be determined and planed in response to international greenhouse gas and global warming Topics.
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• Since 2011, ISO 50001 energy management system has been introduced so that energy management can be implemented more effectively, achieving the goal of sustainable business operations.
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• The carbon content of the VR product VIVE Flow will be confirmed by the Product Carbon Footprint certification. Carbon footprint inventory procedures will be implemented according to ISO 14067 to monitor new product carbon emissions, and the emission volumes at each stage of the product life cycle will subsequently be analyzed. A full scope carbon emission analysis, calculation and assessment based on the SBTi methodology, along with the adoption of a Net Zero Emissions roadmap, and short-, mid-and long-term decarbonization strategies and management indicators will be used for the Net Zero Emissions roadmap of future products.
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• We are committed to improving the energy efficiency of ourselves and our customers. In addition to setting carbon reduction goals, waste reduction and water saving goals have also been determined to reduce impact on the environment.
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