Infineon Technologies manufactures semiconductors and related systems. The company’s products include power semiconductors, as well as microcontrollers and radio frequency products and sensors. The products are key enablers of several important end markets including electric and hybrid road vehicles, renewable power generation equipment including wind turbines, efficient power management in industrial systems and applications and in other types of electrical infrastructure.
Objective
The overall objective is for Infineon to achieve Net Zero Carbon (NZC) emissions across Scopes 1, 2 & 3 by 2050 at the latest. The interim objective is for the company to set targets validated by the Science Based Targets initiative (SBTi).
Background
Infineon is one of the WHEB strategy's top 10 highest emitters by financed (Scope 1 & 2) emissions. When prioritising companies for engagement to meet our NZC commitments, we typically target the highest emitters as they represent the largest opportunities for significant real-world emissions reductions in the portfolio.
A key step along the way to achieving NZC commitments is to set SBTi validated targets, and WHEB has therefore committed to ensuring that 100% of portfolio companies have set such targets by 2030. Through engagement, we have made good progress towards this goal so far, with 82% of financed emissions now being covered by SBTi validated targets. However, Infineon remains a laggard in the portfolio as it has yet to have its targets validated in this way. It is therefore a priority for our engagement on NZC.
Infineon has made progress against its 2030 carbon neutrality target, reducing CO2e emissions by over 50% compared to its 2019 base year.1 However, this target does not include the company’s sizeable scope 3 emissions and is therefore not Paris Aligned. Moreover, carbon neutrality targets typically do not adhere to best practice guidance on the use of offsets, which under the SBTi are capped at 10%.
More promisingly in December 2023 Infineon committed to setting a SBTi validated NZC target. We are therefore keen to see progress on this as a priority.
Actions
In 2024, our engagement efforts with Infineon on carbon emission reductions included writing to congratulate the company on progress made in reducing Scope 1 & 2 emissions whilst also reemphasising the importance of setting a SBTi validated target.
Most recently, in Q3, we had a call with Infineon's' Investor Relations to discuss progress in setting a SBTi validated target, as well as any challenges it is experiencing and what work is being done or planned to overcome these challenges.
Progress/Outcomes
M3: During the call, we discussed how Infineon is committed to reducing its carbon emissions, but progress on certain fronts has been slower than anticipated. While the company has pledged to have its targets validated by SBTi , it has yet to provide a clear timeline for when this will be done, even though over six months have passed since its initial commitment. This delay has been somewhat disappointing, and further follow-ups are needed to ensure progress on this front.
Recently, Infineon has prioritised engaging with its suppliers to enhance sustainability within its supply chain. However, it has faced challenges, particularly in emerging markets where access to renewable energy is more limited. This has impacted the company’s ability to fully integrate green energy solutions across all its global operations.
Regarding carbon offsets, Infineon has emphasised that it aims to minimize reliance on offsets by reducing residual emissions as much as possible. The company acknowledges the complexity of addressing emissions from perfluorinated alkyl (PFA) gases, which are currently destroyed using thermal degradation using natural gas, leading to additional emissions. Infineon is still exploring solutions to this challenge, as it seeks to reduce these emissions without creating further environmental impact.
Overall, Infineon's carbon neutrality strategy is comprehensive, blending internal carbon pricing, energy efficiency initiatives, and employee engagement. Leadership incentives are tied to carbon reduction and diversity targets, ensuring that these priorities remain central to the company's broader business strategy. However, challenges like renewable energy access in some regions and the handling of PFA gases highlight areas where more progress is needed still.